In the latest report released by ATTOM for the third quarter of 2024, key insights into the state of U.S. home equity reveal both a slight decline and a high level of stability in the housing market. According to this recent U.S. Home Equity & Underwater Report, the percentage of equity-rich mortgaged residential properties has slightly dipped from a peak of 49.2% in the second quarter of 2024 to 48.3%. Despite this minor fall, the figures remain considerably higher compared to the same period in the previous year, which logged a 47.4% rate.
The term “equity rich” refers to circumstances where the estimated loan balance on a residential property is 50% or less of its estimated market value. This condition underscores a positive scenario where homeowners possess a substantial equity buffer, which boosts financial stability and flexibility. This increasing trend in property values has significantly contributed to the rise in equity-rich properties, supporting more homeowners in safeguarding their financial health against market fluctuations.
California remains a standout in the national housing landscape, hosting 31 out of the top 50 equity-rich ZIP codes in the country. This dominance underscores the state’s robust property value growth, which outpaces many other regions in the U.S.
On the other end of the equity spectrum, the report notes a slight uptick in properties categorized as “underwater.” These properties, where the combined loans secured by the property exceed its market value by at least 25%, edged up to 2.5% from 2.4% in the second quarter of 2024. However, this figure remains consistent with the 2.5% reported in the third quarter of 2023, indicating stability in the incidence of properties with negative equity across the country.
Being underwater is often a sign of financial strain, as homeowners find themselves locked into loan values that surpass what they could recoup from selling their property. Such conditions can limit mobility and financial options, making it difficult for homeowners to refinance or sell their homes.
The findings of ATTOM’s report are indicative of a broader trend where, despite minor fluctuations, the majority of homeowners in the U.S. continue to enjoy the benefits of increased home equity. This is a crucial indicator of the overall health of the housing market as well as the economic well-being of homeowners. The stability in the proportion of underwater homes also suggests that despite economic pressures and the potential for a softening market, most homeowners are maintaining manageable debt levels relative to their home’s value.
Overall, as we advance into the final quarter of 2024, the housing market demonstrates significant resilience and the continued financial empowerment of homeowners through growing equity, albeit with regional disparities like those seen in California. These trends will be vital to monitor as economic conditions evolve and impact the real estate sector.
