Rising home prices may be a concern for potential buyers, but they are proving to be beneficial for homeowner equity, according to a recent report by ATTOM Data Solutions. In the second quarter of 2024, 49.2% of mortgaged homes were classified as “equity-rich,” meaning they had a loan balance of less than half of the estimated market value.
This marks a 3.4 percentage point increase from the previous quarter and breaks a three-quarter decline trend. Additionally, the number of homes with a mortgage balance of more than 25% of the property’s estimated market value, known as “seriously underwater,” decreased from 2.7% to 2.4%.
CEO Rob Barber of ATTOM Data Solutions noted, “Homeowner wealth saw a significant improvement in the second quarter due to the rise in equity levels driven by the recent surge in home prices. This positive trend comes after a period of stagnant or declining equity, bringing good news to homeowners amidst the ongoing housing market boom.”
The report highlighted that affordable markets in the south and midwest saw the most significant gains in equity-rich homes. Kentucky led the way with a 6-point increase, followed by Illinois, Missouri, Oklahoma, and Alabama.
On the flip side, states in the south and midwest also had the highest share of seriously underwater mortgages. Louisiana, Mississippi, Kentucky, Arkansas, and Iowa topped the list in this category.
States with the highest shares of equity-rich mortgages were Vermont, Maine, New Hampshire, Montana, and Rhode Island. Notable trends included an increase in equity-rich homes in 48 states between Q1 and Q2, and a year-over-year rise in 31 states.
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