Home Equity Growth Continuing in Q1 2021 as Housing Shows Resistance to Pandemic

17.8 million residential homes in the United States are “equity rich,” meaning that the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value. This comes out to 31.9% – or just under one-in-three – of the estimated 55.8 million mortgaged homes in the U.S., which has risen from 30.2% in Q4 2020, 28.3% in Q3 2020 and 26.5% in Q1 2020.

This is according to a new report compiled and released by ATTOM Data Solutions, which asserts that these metrics help demonstrate how “the U.S. housing market continues fending off economic damage caused by the worldwide coronavirus pandemic.”

Only one-in-21 homes in the U.S. secured by a mortgage were considered “seriously underwater” in Q1 2021, coming out to 2.6 million homes “with a combined estimated balance of loans secured by the property at least 25% more than the property’s estimated market value,” the report reads. That figure represented 4.7% of all U.S. properties with a mortgage, down from 5.4% in the prior quarter, 6% in Q3 2020 and 6.6% in Q1 2020.

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“Among the 50 states, 41 showed an increase from the fourth quarter of 2020 to the first quarter of 2021 in the percentage of homes considered equity-rich, while 49 saw a decrease in the percentage that were seriously underwater,” the report reads. “The improvement at both ends of the equity scale continued across the nation despite the fallout from the pandemic. Gains came as median home prices nationwide rose 16% year over year, in the first quarter of 2021 and were up at least 10% in most of the country.”

The biggest improvement in the equity-rich share of homes under ATTOM’s metrics was reserved for states in the western and northeastern states, with Idaho, Utah, Colorado, Vermont and Washington showing the biggest gains, respectively.

Conversely, the biggest decreases were seen in West Virginia, Louisiana, Pennsylvania, Iowa and Mississippi, respectively, the data indicates. The largest declines in the amount of underwater properties were found in states across the midwest and the south, while the San Francisco area in California “dominates” the list of top equity-rich counties, the data said.

“The top 10 states with the highest shares of mortgages that were seriously underwater in the first quarter of 2021 were all in the South and Midwest,” the report reads. “[They were] led by Louisiana (13% seriously underwater), West Virginia (10.5%), Illinois (10.4%), Arkansas (9.2%) and Mississippi (9.1%). The smallest percentages again were in Oregon (1.8%), California (1.9%), Arizona (2%), Washington (2.1%) and Utah (2.1%).”

Read the report at ATTOM Data Solutions.

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