Almost 6.1 million U.S. homeowners, or 10.8% of all U.S. homeowners with a mortgage, were seriously underwater on their mortgages as of the end of the third quarter, according to ATTOM Data Solutions’ U.S. Home Equity and Underwater Report.
As bad as this may sound, it was a decrease of more than 854,000 homeowners compared with the third quarter of 2015. It was also a decrease of more than 6.7 million since the peak in seriously underwater homeowners in the second quarter of 2012, when there were 12.8 million seriously underwater accounts, representing 28.6% of all homeowners with a mortgage.
ATTOM defines “seriously underwater” as 125% loan-to-value (LTV) ratio – meaning the mortgaged amount on a home is 25% greater than its actual market value.
About 13.1 million U.S. homeowners, or 23.4% of all homeowners with a mortgage, were “equity rich” as of the end of the third quarter. That’s an increase of more than 2.6 million from a year ago.
ATTOM defines “equity rich” at 75% LTV.
Many of these homeowners became equity rich during the past year as a result of increasing home values.
“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,” explains Daren Blomquist, senior vice president at ATTOM Data Solutions, in a statement. “Median home prices increased on a year-over-year basis for the 18th consecutive quarter in the third quarter.”
In addition, “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,” Blomquist explains. “As homeowners stay in their homes longer before moving up, they are amassing more home equity wealth.”
San Jose, Calif.; San Francisco; and Honolulu had the highest shares of equity-rich homeowners, according to the report, which can be accessed here.