Homeowner Equity Remains Elevated
…But Dips Downward Again in First Quarter
By ATTOM Team
ATTOM, a leading curator of land, property, and real estate data, released its first-quarter 2024 U.S. Home Equity & Underwater Report, which shows that 45.8% of mortgaged residential properties in the United States were considered equity-rich in the first quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.
The portion of mortgaged homes that were equity-rich in the first quarter of 2024 is down from 46.1% in the fourth quarter of 2023, marking the third straight quarterly decline. The latest figure also was down from 47.2% in the first quarter of 2023, hitting the lowest point in two years.
At the same time, the report shows that the portion of mortgaged homes that were seriously underwater in the U.S. rose slightly in the first few months of 2024, from 2.6% to 2.7% of all residential mortgages. Seriously underwater mortgages are those with combined estimated balances of loans secured by properties that are at least 25% more than those properties’ estimated market values.
“Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to help finance all kinds of things, from home renovations to business startups. Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated,” said Rob Barber, CEO for ATTOM.
“It’s too early to make any broad statements about the market direction, especially coming off the typically slower Fall and Winter months. But amid the recent trends, this year’s Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing.”
The latest equity drop-offs emerged as the national median single-family home and condo value slipped 4% over the Winter and was up just a modest 3% year-over-year during the first quarter. When prices flatten out or drop, equity usually follows even as homeowners pay off mortgages. That’s because equity is based on mortgage debt as a portion of estimated property values.
Heading into the Spring buying season, the market faces a mix of forces that could drive it back up or hold it steady. Those forces include a tight supply of homes for sale and a strong investment market but also mortgage interest rates that have climbed back above 7% for a 30-year loan on top of home prices that remain a financial stretch for average wage earners.
Equity-rich share of mortgages declines quarterly in a majority of U.S.
The portion of mortgages that were equity-rich decreased in 26 of the 50 U.S. states from the fourth quarter of 2023 to the first quarter of 2024, commonly by less than two percentage points. Measured annually, equity-rich levels dropped from the first quarter of 2023 to the same period this year in 25 states.
The biggest quarterly declines came in the South regions, led by:
» Kentucky (portion of mortgages homes considered equity-rich decreased from 35.4% in the fourth quarter of 2023 to 28.7% in the first quarter of 2024)
» South Carolina (down from 42.4% to 4%)
» Georgia (down from 46% to 43.7%)
» Delaware (down from 39.4% to 37.2%)
» Indiana (down from 43% to 40.9%).
At the other end of the scale, equity-rich levels rose in 23 states from the fourth quarter of 2023 to the first quarter of 2024, mostly by less than one percentage point. The largest improvements were concentrated in the Midwest and West regions, led by:
» South Dakota (up from 49.8% to 51.5%)
» Hawaii (up from 55% to 56.5%)
» Montana (up from 57.3% to 58.7%)
» North Dakota (up from 30.4% to 31.5%)
» Mississippi (up from 37.3% to 38.3%)
