Less Than 10 Percent of Homeowners Are Underwater on Their Mortgages

– When the housing crisis was at its lowest point, more than 30 percent of homeowners owed lenders more than the value of their homes

– Almost 4.5 million American homeowners still owe more on their mortgages than their homes are worth.

– About one in seven homeowners with a mortgage (15.4 percent) have some equity in their home, but likely not enough to sell and comfortably use the proceeds for a down payment on another home.

– Detroit has the largest share of deeply underwater homeowners, who owe twice as much as their homes are worth.

Seattle, WA – May 30, 2018 (PRNewswire) More than a decade after the housing market collapsed, the recovery has passed another milestone. The share of homeowners who owe more than the value of their home is 9.1 percent, falling below 10 percent for the first time since the housing market fell, according to Zillow®’s 2017 Q4 Negative Equity Reporti.

Zillow Logo

The typical U.S. home lost more than a quarter of its value when the market crashed, sending millions of homeowners into negative equity, when their homes’ values were lower than the balances on their mortgages. Now, though, national home values are higher than ever, and many owners who held on to their homes throughout the housing crisis have resurfaced on their mortgages.

Still, despite the progress made as the negative equity rate falls, 4.4 million homeowners remain underwater, and about 713,000 of them owe at least twice as much as their homes’ value.

Negative equity acts as a drag on the overall housing market, extending beyond homeowners who are underwater. Low inventory is one of the main factors in driving home values higher, as demand from millennials – the largest group of homebuyers – exceeds the available supply. Underwater homeowners are contributing to this shortage, holding on to their homes instead of selling for a loss.

“For much of the country the Great Recession is an increasingly distant memory – the American economy is booming once again and markets are now shifting their gaze to future downturn risks,” said Zillow senior economist Aaron Terrazas. “But scattered in neighborhoods across the country, the legacy of the mid-2000s housing bubble and bust lingers among the millions of Americans still underwater on their mortgages, trapped in their homes with no easy options to regain equity other than waiting. Their struggles mean there are fewer homes on the market for homebuyers today. In corners of the country where home values have been stagnant in recent years, recent homebuyers can easily fall underwater, particularly those who buy with small down payments.”

Nationally, roughly one in seven homeowners with a mortgage (15.4 percent) have some equity in their home, but likely not enough to sell and comfortably use the proceeds for a down payment on another home. Including these homeowners with limited equity, the nation’s “effective” negative equity rate jumps to 24.6 percent.

Detroit homeowners have the furthest to go to regain positive equity. In the metro, 25.4 percent of homeowners currently in negative equity – or about 22,000 – still owe at least double the value of their home.

Chart

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with great real estate professionals. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow Group’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

(i) The data in the Zillow Negative Equity Report incorporates mortgage data from TransUnion, a global leader in credit and information management, to calculate various statistics. The report includes, but is not limited to, negative equity, loan-to-value ratios, and delinquency rates. To calculate negative equity, the estimated value of a home is matched to all outstanding mortgage debt and lines of credit associated with the home, including home equity lines of credit and home equity loans. All personally identifying information (“PII”) is removed from the data by TransUnion before delivery to Zillow. Overall, this report covers more than 870 metros, 2,400 counties, and 23,000 ZIP

Seriously Underwater U.S. Properties Down 291,000 From Year Ago, Smallest Annual Decrease Since Tracking Began In Q1 2013

Equity Rich U.S. Properties Down From Peak in Q2 2017, Up From Year Ago; Share of Properties with 20 to 50 Percent Equity Decreases 1.7 Million From Year Ago

Irvine, CA – May 3, 2018 (PRNewswire) ATTOM Data Solutions, curator of the nation’s premier multi-sourced property database, today released its Q1 2018 U.S. Home Equity & Underwater Report, which shows that at the end of the first quarter of 2018, more than 5.2 million (5,206,446) U.S. properties were seriously underwater (where the combined balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 291,000 properties from a year ago — the smallest year-over-year drop since ATTOM began tracking in Q1 2013.

ATTOM Logo

The 5.2 million seriously underwater properties at the end of Q1 2018 represented 9.5 percent of all U.S. properties with a mortgage, up from 9.3 percent in the previous quarter but down from 9.7 percent in Q1 2017.

“We’ve reached a tipping point in this housing boom where enough homeowners have regained both sufficient equity and sufficient confidence to tap into their home equity — resulting in a noticeably slower decline in seriously underwater properties and slower growth in equity rich properties,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This tapping of equity could take the form of a cash-out refinance, home equity loan or simply a home sale. We saw the biggest quarterly drop in average homeownership tenure for homeowners who sold in the first quarter since Q4 2008, evidence that more homeowners are reaching that equity-tapping tipping point more quickly and deciding to sell.”

Historical U.S. Underwater & Equity Rich Trends

Chart

Properties with 20 to 50 percent equity down by 1.7 million from year ago
More than 19.5 million (19,513,871) U.S. properties had between 20 and 50 percent equity (LTV of between 80 and 50 percent) at the end of Q1 2018, down by 1,714,099 from a year ago, an 8 percent decrease.

Homes with 20 to 50 percent equity represented 36.1 percent of all properties with a mortgage as of the end of Q1 2018, down from 36.3 percent in the previous quarter and down from 37.6 percent in Q1 2017.

Equity rich properties represent one in four properties with a mortgage
More than 13.8 million (13,841,082) U.S. properties with a mortgage were equity rich at the end of Q1 2018, up by more than 122,000 from a year ago but still down from a peak of more than 14 million equity rich properties in Q2 2017.

The 13.8 million equity rich properties represented 25.3 percent of all U.S. properties with a mortgage, down from 25.4 percent in the previous quarter but still up from 24.3 percent in Q1 2017.

Highest share of equity rich properties in coastal California, Honolulu, Seattle
States with the highest share of equity rich homes were Hawaii (41.6 percent); California (41.5 percent); New York (34.8 percent); Washington (33.1 percent); and Oregon (31.8 percent).

Among 98 metropolitan statistical areas with a population of at least 500,000, those with the highest share of equity rich homes were San Jose, California (66.1 percent); San Francisco, California (56.0 percent); Los Angeles, California (45.4 percent); Honolulu, Hawaii (43.1 percent); and Seattle, Washington (39.1 percent).

Highest share of seriously underwater properties in Scranton, Baton Rouge, Youngstown
States with the highest share of seriously underwater homes at the end of Q1 2018 were Louisiana (20.1 percent); Mississippi (18.0 percent); Iowa (17.2 percent); West Virginia (15.9 percent); and Illinois (15.9 percent).

Among 98 metropolitan statistical areas with a population of at least 500,000, those with the highest share of seriously underwater homes at the end of Q1 2018 were Scranton, Pennsylvania (21.9 percent); Baton Rouge, Louisiana (19.9 percent); Youngstown, Ohio (19.5 percent); New Orleans, Louisiana (18.5 percent); and Toledo, Ohio (18.0 percent).

Along with New Orleans, among 51 metro areas with at least 1 million people, those with more than 13 percent of seriously underwater properties were Cleveland, Ohio (16.5 percent); Milwaukee, Wisconsin (16.0 percent); St. Louis, Missouri (14.7 percent); Chicago, Illinois (13.8 percent); Detroit, Michigan (13.6 percent); Virginia Beach, Virginia (13.4 percent); and Kansas City, Missouri (13.4 percent).

Report methodology
The ATTOM Data Solutions U.S. Home Equity & Underwater report provides counts of residential properties based on several categories of equity — or loan to value (LTV) — at the state, metro, county and zip code level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV is calculated based on record-level loan model estimating position and balance of loans secured by a property and a record-level automated valuation model (AVM) derived from publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide for more than 150 million U.S. properties.

Definitions
Seriously underwater: Loan to value ratio of 125 percent or above, meaning the property owner owed at least 25 percent more than the estimated market value of the property.

Equity rich: Loan to value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity.

About ATTOM Data Solutions
ATTOM Data Solutions provides premium property data to power products that improve transparency, innovation, efficiency and disruption in a data-driven economy. ATTOM multi-sources property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, and neighborhood data for more than 155 million U.S. residential and commercial properties covering 99 percent of the nation’s population. A rigorous data management process involving more than 20 steps validates, standardizes and enhances the data collected by ATTOM, assigning each property record with a persistent, unique ID — the ATTOM ID. The 9TB ATTOM Data Warehouse fuels innovation in many industries including mortgage, real estate, insurance, marketing, government and more through flexible data delivery solutions that include bulk file licenses, APIs and customized reports.

Media Contact:
Christine Stricker
949.748.8428
christine.stricker@attomdata.com

Data and Report Licensing:
949.502.8313
datareports@attomdata.com

The Solution to Underwater Homes?

As a SCUBA diver who also loves human creativity the following photos really caught my eye! The ‘underwater’ Realtor is Prudential’s Whitney Pannell from Lexington, Kentucky. With so many homes ‘under water’ it seems Whitney can help! 😉 I love this simple but effective marketing message. Nice job!