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Number of Equity-Rich Homes Slipping Amid Decline in Home Values

ATTOM Data, has released its year-end fourth quarter U.S. Home Equity & Underwater Report for 2023 which overall showed that 46.1% of mortgaged residences in the country were considered to be equity rich, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. 

This number decreased from the third quarter of 2023 equity-rich number of 47.4%, marking the second straight quarterly decline. Year-over-year, this figure is down from 48%. 

At the same time, the number of mortgaged homes that were seriously underwater rose during the last months of 2023, from 2.5% to 2.6% of all 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. 

The overall decline came during a year when the median home price grew annually by just 2%, making 2023 the weakest year for growth since 2012 when the housing market was just beginning to recover from the hit of the Great Recession. 

Prices grew at only a modest pace in 2023 amid a mixed scenario of rising mortgage rates that offset upward pressure from a tight supply of homes for sale, strong employment and a rising investment market. The potential for more uneven equity trends remains in place as the housing market heads into its annual peak Spring and Summer buying season but faces elevated prices that remain a financial stretch for wide swaths of the potential buying public. 

The portion of mortgages that were equity-rich decreased in 41 of 50 states from the third to fourth quarter of 2023, most commonly by 1-3%. 

The biggest declines came in the Midwest and West regions, led by Missouri (portion of mortgages homes considered equity-rich decreased from 41.9% in the third quarter of 2023 to 37.3% in the fourth quarter of 2023), Minnesota (down from 39.5% to 35.9%), Michigan (down from 48.5% to 45.1%), Washington (down from 56.7% to 53.5%) and Utah (down from 56.8% to 53.7%). 

The biggest increases were in the Northeast. The biggest increases were in Vermont (up from 79.8% to 82.8%), West Virginia (up from 30.5% to 32%), Wyoming (up from 39.9% to 41.2%), New Jersey (up from 45.9% to 46.8%) and Connecticut (up from 41.5% to 42.4%). 

The portion of mortgaged homes considered seriously underwater rose nationwide from one in 40 during the third quarter of 2023 to one in 38 during the fourth quarter. The ratio went up in 42 states, mostly by less than one percentage point. The largest quarterly increases were in Wyoming (share of mortgaged homes that were seriously underwater up from 5.9% in the third quarter of 2023 to 8.8% in the fourth quarter of 2023), Missouri (up from 3.9% to 5.6%), Oklahoma (up from 4.6% to 5.5%), North Dakota (up from 4.6% to 5.2%) and Illinois (up from 4.4% to 5.1%). 

Click here to view the report in its entirety, including top-level city-data. 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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