28% of U.S. homes now equity-rich

Home equity levels across the United States continued to grow in the third quarter, with 16.7 million residential properties considered equity-rich at the end of September, according to Attom Data Solutions.

A property is considered “equity-rich” when the combined amount of loans secured by that property is 50% or less of its estimated market value. During the third quarter, 28.3% of mortgaged homes in the country were equity-rich, up from 27.5% in the quarter prior and 26.7% in the third quarter last year.

“Homeowner equity in the third quarter added another pebble to the pile of markers showing that the U.S. housing market continues to defy the broad downturn in the economy this year,” said Todd Teta, chief product officer for Attom. “Home prices keep rising, boosting the balance sheets of homeowners throughout most of the country,”

Just one state — California — saw a quarterly decrease in the share of equity-rich homes, and even with the drop, California retained the second-highest percentage of equity-rich homes in the nation. The 11 states with the highest share of equity-rich properties were all in the Northeast and West, led by Vermont (with 45.1% of homes equity-rich), California (39.7%), Hawaii (39.6%) and Washington (39.5%).

Similarly, of metros with a population above 500,000, nine of the 10 with the highest percentages of equity-rich properties during the third quarter were in the West. San Jose led the country with a 63.7% share, followed by San Francisco (49.7%), Los Angeles (44.0%) and Seattle (42.0%).

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Meanwhile, just 3.5 million — roughly one in 17 — mortgages homes in the third quarter were seriously underwater, with a combined balance of loans secured by the property at least 25% more than the property’s estimated market value. Six percent of mortgaged properties were seriously underwater during Q3, down from 6.2% in the second quarter and 6.5% in the third quarter last year. Equity-rich properties outnumbered properties that were seriously underwater by almost five to one.

The states with the highest seriously underwater shares were concentrated in the South and Midwest. Louisiana, with 15.3% of properties seriously underwater, had the highest share, followed by West Virginia (13.8%), Mississippi (12.6%) and Iowa (12.1%). Baton Rouge, Louisiana, had the highest share of seriously underwater properties (14.5%) among metros with a population above 500,000. Incidentally, Baton Rouge also had the lowest percentage of equity-rich properties in the third quarter at just 12.8%.

With the housing market staying buoyant and home values remaining on the rise throughout 2020, Teta said that overall equity should continue improving, despite the continued negative impacts of COVID-19.

“With the foundation under the housing market still shaky as the coronavirus remains a threat, we will continue to monitor closely the various metrics, including equity,” Teta said. “But as it’s been throughout the pandemic, the market is strong and homeowners remain in a position to benefit.”


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