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‘Seriously Underwater’ U.S. Properties On the Rise

‘Seriously Underwater’ U.S. Properties On the Rise

ATTOM Data Solutions, property database curator, released its Q1 2019 U.S. Home Equity & Underwater Report, which shows that at the end of the first quarter of 2019, more than 5.2 million U.S. properties were “seriously underwater,” an increase of 17,000 properties from a year ago. ATTOM defines seriously underwater as being where the combined balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value.

The 5.2 million seriously underwater properties at the end of Q1 2019 represented 9.1 percent of all U.S. properties with a mortgage, up from 8.8 percent in the previous quarter but down from 9.5 percent in Q1 2018.

“With home prices increasing at a slower pace in 2018 than in previous years, the potential for people to climb out from mortgages that are underwater or advance into equity-rich territory, tends to be reduced,” said Todd Teta, chief product officer at ATTOM Data Solutions. “However, only one in 11 mortgages are seriously underwater today, compared to nearly one in three during the depths of the recession.

Although, if the latest trend continues, it will raise another clear signal of a market slowdown, which will be good for buyers, but not so good for sellers. But if the pattern of the past few years takes hold – with levels of underwater and equity rich mortgages turning around – it will mean the market remains strong for sellers, with fewer needing to get out from under financial distress.”

underwater properties chart

Highest seriously underwater share in Louisiana, Mississippi, Arkansas, West Virginia

States with the highest share of seriously underwater properties were Louisiana (20.7 percent); Mississippi (17.1 percent); Arkansas (16.3 percent); West Virginia (16.2 percent); and Illinois (16.2 percent).

Among 99 metropolitan statistical areas analyzed in the report, those with the highest share of seriously underwater properties were Baton Rouge, La. (21.3 percent); Scranton, Pa. (20.0 percent); Youngstown, Ohio (19.2 percent); Toledo, Ohio (19.2 percent); and New Orleans (17.8 percent).

32 zip codes where more than half of all properties are seriously underwater

Among 7,639 U.S. zip codes with at least 2,500 properties with mortgages, there were 32 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Milwaukee, Trenton, Chicago, Saint Louis, and Cleveland metropolitan statistical areas.

The top five zip codes with the highest share of seriously underwater properties were 53206 in Milwaukee, Wisconsin (70.5 percent seriously underwater); 08611 in Trenton, New Jersey (68.9 percent); 69361 in Scottsbluff, Nebraska (63.4 percent); 60426 in Harvey, Illinois (63.1 percent); and 61104 in Rockford, Illinois (62.8 percent).

Highest equity-rich share in California, Hawaii, New York, Washington, Vermont

States with the highest share of equity-rich properties were California (43.0 percent); Hawaii (38.1 percent); New York (34.2 percent); Washington (33.2 percent); and Vermont (32.8 percent). Equity-rich is defined as having a  loan-to-value ratio of 50 percent or lower, meaning the property owner had at least 50 percent equity.

Among 99 metropolitan statistical areas analyzed in the report, those with the highest share of equity rich properties were San Jose, California (68.3 percent); San Francisco, California (58.4 percent); Los Angeles, California (48.1 percent); Santa Rosa, California (47.6 percent); and San Diego, California (39.3 percent).

underwater properties

408 zip codes where more than half of all properties are equity-rich

Among 7,639 U.S. zip codes with at least 2,500 properties with mortgages, there were 408 zip codes where more than half of all properties with a mortgage were equity rich.

The top five zip codes with the highest share of equity rich properties were all located in the San Jose and San Francisco markets in California: 94040 in Mountain View (82.3 percent equity rich); 94116 in San Francisco (81.7 percent); 94087 in Sunnyvale (81.6 percent); 94085 in Sunnyvale (81.1 percent); and 94122 in San Francisco (81.0 percent).

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