The FINANCIAL — ATTOM Data Solutions, curator of the nation’s largest fused property database, on November 17 released its Q3 2016 U.S. Home Equity and Underwater Report, which shows that 13,125,367 U.S. homeowners were equity rich (loan-to-value ratio of 50 percent or lower) as of the end of Q3 2016, representing 23.4 percent of all U.S. homeowners with a mortgage and an increase of more than 2.6 million from a year ago.
The report also shows that 6,063,326 U.S. homeowners were seriously underwater (LTV of 125 or higher) as of the end of Q3 2016, representing 10.8 percent of all U.S. homeowners with a mortgage, and a decrease of more than 854,000 homeowners from a year ago. Since the peak in seriously underwater homeowners at 12.8 million representing 28.6 percent of all homeowners with a mortgage in Q2 2012, the number of seriously underwater homeowners has decreased by more than 6.7 million.
“Close to one in every five U.S. homeowners with a mortgage is now equity rich thanks to a combination of rising home prices and lengthening homeownership tenures,” said Daren Blomquist, senior vice president at ATTOM Data Solutions, the new parent company of RealtyTrac. “Median home prices increased on a year-over-year basis for the 18th consecutive quarter in Q3 2016, and homeowners who sold in the third quarter had owned their home an average of 7.94 years — a new high in our data and substantially higher than the average homeownership tenure of 4.26 years pre-recession. As homeowners stay in their homes longer before moving up, they are amassing more home equity wealth.”
San Jose, San Francisco, Honolulu with highest share of equity rich homeowners
Among 88 metropolitan statistical areas with a population of at least 500,000 or more, those with the highest share of equity rich homeowners were San Jose (55.7 percent); San Francisco (49.8 percent); Honolulu (39.3 percent); Los Angeles (38.2 percent); and Pittsburgh (34.5 percent).
Other metro areas in the top 10 for highest share of equity rich homeowners were Portland (33.1 percent), San Diego (33.0 percent); Oxnard-Thousand Oaks-Ventura, California (32.7 percent); Seattle (31.5 percent); and Austin, Texas (31.0 percent).
There were seven metro areas where the share of equity rich homeowners increased by more than 10 percentage points from a year ago in Q3 2016: San Francisco (up 11.9 percentage points); San Jose (up 11.9 percentage points); Cape Coral-Fort Myers, Florida (up 11.5 percentage points); Portland, Oregon (up 11.2 percentage points); Denver (up 11.2 percentage points); Austin, Texas (up 10.8 percentage points); and Seattle (up 10.8 percentage points).
“The percentage of equity rich households in the Seattle area took off at the end of last year and has been rising at an impressive rate ever since then, especially when compared to the country as a whole — which has seen a far more modest increase than we have locally,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “This growth in home equity wealth will likely lead to an increase in cash-out refinancing in our market, but more importantly, it will serve to protect Seattle homeowners from any unforeseeable shocks that might arise in the future.”
More than 20 percent of homeowners underwater in Las Vegas, Cleveland, Detroit
The share of seriously underwater homeowners was 20 percent or higher in seven of the 88 metro areas analyzed in the report: Las Vegas (25.0 percent); Akron, Ohio (24.2 percent); Cleveland, Ohio (22.8 percent); Toledo, Ohio (21.7 percent); Dayton, Ohio (20.2 percent); Detroit (20.0 percent); and Lakeland-Winter Haven, Florida (20.0 percent).
Other markets in the top 10 for highest share of seriously underwater homeowners were Chicago (19.5 percent); Kansas City (18.4 percent); and Memphis (18.3 percent).
Counter to the national trend, the share of seriously underwater homeowners increased from a year ago in 21 of the 88 metro areas analyzed, including Akron, Ohio; McAllen-Edinburg-Mission, Texas; Baton Rouge, Louisiana; Scranton-Wilkes-Barre-Hazleton, Pennsylvania; and Little Rock, Arkansas.
17 ZIP codes with two-thirds of homeowners underwater
Among 6,911 U.S. ZIP codes analyzed in report, 17 posted seriously underwater rates of 66 percent or higher, including ZIP codes in the following metro areas: Chicago, St. Louis, Detroit, Columbus, Ohio; East Stroudsburg, Pennsylvania; Trenton, New Jersey; Cleveland, and Milwaukee.
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