The latest report from ATTOM on the U.S. Home Equity & Underwater status for the second quarter of 2024 reveals some promising trends in the housing market. Nearly half of mortgaged residential properties in the United States are now considered equity-rich, indicating that the loan balances on these properties are no more than half of their estimated market values.
In the second quarter of 2024, 49.2 percent of mortgaged homeowners were in equity-rich territory, a significant increase from the previous quarter. This rise marks a reversal of three consecutive quarterly declines and is one of the most substantial gains in the past five years. This positive trend is attributed to a spike in home prices during the 2024 Spring buying season, with the median national price reaching a record high of $365,000.
While equity-rich levels improved, the report also shows a decline in the portion of home mortgages that were seriously underwater. Only 2.4 percent of mortgages were seriously underwater, down from the prior quarter. Seriously underwater mortgages have loan balances at least 25 percent higher than the properties‘ market values.
The increase in equity levels can be attributed to several factors, including steady mortgage rates, a low national unemployment rate, and thriving investment markets. The housing market rebounded from several sluggish quarters of price variations, leading to a boost in homeowner wealth.
Equity-rich levels increased in 48 of the 50 U.S. states from the first to the second quarter of 2024, with notable gains in lower-priced markets like Kentucky and Illinois. However, equity-rich levels remained flat in some states, with only slight increases in others. The highest levels of equity-rich mortgaged properties were in the Northeast and West regions, while the South and Midwest had the lowest levels.
Among metropolitan areas with over 500,000 residents, upscale markets like San Jose, Miami, and San Diego had the highest portions of equity-rich properties. Conversely, Baton Rouge and New Orleans had the lowest. Counties with the highest shares of equity-rich properties were predominantly in the Midwest and Northeast, while the lowest shares were in Southern counties.
Across 9,120 U.S. zip codes, nearly half had at least 50 percent of mortgaged properties considered equity-rich. California, Florida, and Texas zip codes dominated this list. The Midwest and South had the highest shares of seriously underwater mortgages, with Louisiana at the top. This report highlights the dynamic nature of the housing market and the varying regional impacts on homeowner equity.
Overall, the second quarter of 2024 has shown significant improvements in homeowner equity levels, driven by a strong housing market and rising home prices. This positive trend bodes well for homeowners across the country, signaling a healthy and robust real estate market.