*article courtesy of AZ Big Media
ATTOM, curator of the nation’s premier property database, today released its third-quarter 2021 U.S. Home Equity & Underwater Report, which shows that 39.5 percent of mortgaged residential properties in the United States were considered equity-rich in the third quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market value.
The portion of mortgaged homes that were equity-rich in the third quarter of 2021 – one in three – was up from 34.4 percent in the second quarter of 2021 and from 28.3 percent in the third quarter of 2020.
The report also shows that just 3.4 percent of mortgaged homes, or one in 29, were considered seriously underwater in the third quarter of 2021, with a combined estimated balance of loans secured by the property of at least 25 percent more than the property’s estimated market value. That was down from 4.1 percent of all U.S. homes with a mortgage in the prior quarter and 6 percent, or one 17 properties, a year ago.
Across the country, 46 states including the District of Columbia saw equity-rich levels increase from the second quarter to the third quarter of 2021, while seriously underwater percentages decreased in 39 states. Year over year, equity-rich levels rose in 49 states including the District of Columbia, and seriously underwater portions dropped in 47 states including the District of Columbia.
The improvements at both ends of the equity scale represented some of the largest quarterly gains in two years and provided yet another sign of how strong the U.S. housing market remained in the third quarter, even as the broader economy only gradually recovered from damage resulting from the Coronavirus pandemic that hit early last year.
Equity increases during the months running from July through September came as the median home price nationwide rose 4 percent quarterly and 16 percent year over year, to a new record of $310,500. Median vales rose up at least 10 percent annually in two-thirds of metro-areas around the country. Those ongoing price runups continued boosting home equity because they widened gaps between what homeowners owed on their mortgages and the value of their properties.
Prices have continued rising over the past year amid rock-bottom mortgage rates and a desire of many households to flee virus-prone areas for the perceived safety of a house and yard or find more space to accommodate new work-at-home lifestyles. That has generated a bubble of home buyers chasing a tight supply of properties for sale throughout the past year and a half, spiking demand and boosting home values and home equity.
Some signs of a possible market slowdown have emerged recently in the form of declining home affordability, rising foreclosures and falling investor profits. But the third-quarter price and equity gains shined as prime examples of how the housing market boom continues surging through its 10th straight year.
“Homeowners across most of the United States could sit back with a smile yet again in the third quarter and watch their balance sheets grow as soaring home prices pushed their equity levels ever higher. Amid the best gains in two years, nearly four of every 10 owners found themselves in equity-rich territory,” said Todd Teta, chief product officer with ATTOM. “For sure, some uncertainty lies ahead as other key market barometers have been a bit shaky as of late. And the Coronavirus pandemic remains a threat. But there is doubt that homeowners continue benefitting big-time from the relentless home price increases we are seeing around the country.”
