Home Equity Down but Respectable in Q4 2023

In the fourth quarter of 2023, 46.1% of mortgaged residential properties were deemed equity-rich, meaning that nearly half of homeowners outright own a notable amount of their properties in comparison to the outstanding mortgage or debts associated with them, according to ATTOM’s fourth quarter 2023 U.S. Home Equity & Underwater Report.

According to the report, the amount of homes that were equity-rich in Q4 2023  decreased from 47.4% in Q3, marking two consecutive quarterly declines.

The report also presented data showing that the amount of mortgaged homes seriously underwater across the market climbed slightly from 2.5% to 2.6% in the concluding months of 2023.

These fourth quarter results occurred in the wake of a year when the median home price grew a measly 2%, the weakest since 2012—just after the market entered the recovery stage after the Great Recession.

Key takeaways:

The equity-rich share of mortgages dropped in 41 out of 50 states from the third quarter to the fourth quarter, by one to three percentage points. The biggest declines were in the Midwest and West:

  • Washington  56.7% to 53.5%

Equity-rich levels jumped in only nine states between the third quarter and fourth quarter—with a focus in the Northeast. The biggest increases were found in: 

  • Vermont 79.8% to 82.8%
  • West Virginia 30.5% to 32%
  • Wyoming 39.9% to 41.2%
  • New Jersey 45.9% to 46.8%
  • Connecticut 41.5% to 42%

Seriously underwater mortgage levels were up moderately in 42 states, rising to one in 38 people in the fourth quarter. The largest quarterly increases were in:

  • Wyoming 5.9% to 8.8%
  • Missouri 3.9% to 5.6%
  • Oklahoma 4.6% to 5.5%
  • North Dakota 4.6% to 5.2%
  • Illinois 4.4% to 5.1%

States where the percentage of seriously underwater homes decreased the most from the third quarter to the fourth quarter of 2023 include:

  • Idaho 2.7% to 2.3% 
  • California 1.6% to 1.3%
  • West Virginia 4.6% to 4.4% 
  • Texas 2.4% to 2.2%
  • Vermont 0.9% to 0.7%

The highest levels of equity-rich homeowners are still in the Northeast and West, with the largest portions in:

  • Vermont 82.8% 
  • Maine 60%
  • California 58.2%
  • New Hampshire 58% 
  • Idaho 57.6%

States with the lowest percentage of equity-rich properties were concentrated in the Midwest or South, with nine out of 10 appearing in those regions. The smallest portions were found in: 

  • Louisiana 19.7%
  • Illinois 28% 
  • Alaska 29.2%
  • Oklahoma 30%
  • Maryland 30.2%

The largest shares of seriously underwater mortgages were concentrated in the Midwest and South, with nine of the top 10 states located in those regions. The top five states that were seriously underwater in the fourth quarter of 2023 were:

  • Louisiana 10.9%
  • Wyoming 8.8%
  • Mississippi 8%
  • Kentucky 6.3%
  • Missouri 5.6%

The states with the smallest shares of seriously underwater mortgages include:

  • Vermont 0.7%
  • New Hampshire 1%
  • Rhode Island 1%
  • Massachusetts 1.2%
  • California 1.3%

What the experts say:

“There are increasing signs suggesting that the extended period of prosperity in the U.S. housing market may be showing signs of easing,” said ATTOM CEO Rob Barber. “It’s not as if there are big warning signs flashing. Similar things were happening early last year before the market surged in the spring. But the softening of equity follows a dip in resale profits last year for the first time in more than a decade as prices have stopped soaring through the roof. This year’s peak buying season will tell us a lot about whether things really have settled down long-term.”

For the full report, click here.

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