SOURCE: ATTOM Data Solutions

ATTOM Data Solutions

February 09, 2017 00:01 ET

Number of Seriously Underwater U.S. Properties Down 1 Million From Year Ago, Down 7.1 Million From Market Bottom in Q1 2012

Number of Equity Rich U.S. Properties Increases by 1.3 Million Compared to a Year Ago; But Equity Lost During Downturn Helping to Keep Average Homeownership Tenure Elevated at Nearly Twice Pre-Recession Levels

IRVINE, CA--(Marketwired - February 09, 2017) - ATTOM Data Solutions, curator of the nation's largest fused property database, today released its Year-End 2016 U.S. Home Equity & Underwater Report, which shows that as of the end of 2016 there were 5.4 million (5,408,323) U.S. properties seriously underwater -- where the combined loan amount secured by the property was at least 25 percent higher than the property's estimated market value -- a decrease of more than 1 million properties (1,028,058) from a year ago.

The 5.4 million seriously underwater properties at the end of 2016 represented 9.6 percent of all U.S. properties with a mortgage, down from 10.8 percent at the end of Q3 2016 and down from 11.5 percent at the end of 2015 to the lowest level since ATTOM Data Solutions began tracking in Q1 2012.

The report is based on publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide along with an industry standard automated valuation model (AVM) updated monthly in the ATTOM Data Warehouse of more than 150 million U.S. properties (see full methodology below).

"Since home prices bottomed out nationwide in the first quarter of 2012, the number of seriously underwater U.S. homeowners has decreased by about 7.1 million, an average decrease of about 1.4 million each year," said Daren Blomquist, senior vice president with ATTOM Data Solutions. "Meanwhile, the number of equity rich homeowners has increased by nearly 4.8 million over the past three years, a rate of about 1.6 million each year.

"Despite this upward trend over the past five years, the massive loss of home equity during the housing crisis forced many homeowners to stay in their homes longer before selling, effectively disrupting the historical domino effect of move-up buyers that feeds both demand for new homes and supply of inventory for first-time homebuyers," Blomquist noted. "Between 2000 and 2008, our data shows the average homeownership tenure nationwide was 4.26 years, but that average tenure has been trending steadily higher since 2009, reaching a new record high of 7.88 years for homeowners who sold in 2016."

Number of equity rich properties increases 1.3 million from year ago
The report also found that as of the end of 2016 there were 13.9 million (13,877,315) U.S. properties that were equity rich -- where the combined loan amount secured by the property was 50 percent or less of the property's estimated market value -- an increase of nearly 1.3 million (1,256,041) from a year ago.

The 13.9 million equity rich properties at the end of 2016 represented 24.6 percent of all U.S. properties with a mortgage, up from 23.4 percent at the end of Q3 2016 and up from 22.5 percent at the end of 2015.

Historical U.S. Underwater & Equity Rich Trends

Qtr-Yr  
U.S. Properties
Seriously Underwater

 % Seriously Underwater  
U.S. Properties Equity Rich
 % Equity Rich
Q1 2012  12,533,155  27.8%      
Q2 2012  12,824,279  28.6%      
Q3 2012  12,472,262  27.6%      
Q1 2013  10,894,743  25.8%      
Q2 2013  11,336,033  25.7%      
Q3 2013  10,714,924  23.2%      
Q4 2013  9,274,126  18.8%  9,097,325  18.5%
Q1 2014  9,065,741  17.5%  9,935,939  19.1%
Q2 2014  9,074,449  17.2%  9,945,646  18.9%
Q3 2014  8,135,648  15.0%  10,812,968  20.1%
Q4 2014  7,052,570  12.7%  11,249,646  20.3%
Q1 2015  7,341,922  13.2%  11,053,055  19.8%
Q2 2015  7,443,580  13.3%  10,963,041  19.6%
Q3 2015  6,917,673  12.7%  10,476,259  19.2%
Q4 2015  6,436,381  11.5%  12,621,274  22.5%
Q1 2016  6,703,857  12.0%  12,335,651  22.0%
Q2 2016  6,666,622  11.9%  12,383,345  22.1%
Q3 2016  6,063,326  10.8%  13,125,367  23.4%
Q4 2016  5,408,323  9.6%  13,877,315  24.6%
         

Nevada, Illinois, Ohio post highest share of seriously underwater properties
States with highest share of seriously underwater properties were Nevada (19.5 percent); Illinois (16.6 percent); Ohio (16.3 percent); Missouri (14.6 percent); and Louisiana (14.5 percent).

Among 88 metropolitan statistical areas with a population of at least 500,000 and sufficient home value and loan data, those with the highest share of seriously underwater properties were Las Vegas (22.7 percent); Cleveland (21.5 percent); Akron, Ohio (20.1 percent); Dayton, Ohio (20.0 percent); and Toledo, Ohio (19.9 percent).

"In the markets HER Realtors serves, there was a substantial reduction in properties underwater as well as an increase in owners who are at less than 50 percent LTV -- consistent with rising home prices across Ohio, driven by a strong buyer's market and lack of inventory," said Matthew L. Watercutter, senior regional vice president and broker of record for HER Realtors, covering the Dayton, Columbus and Cincinnati markets in Ohio. "One of the primary reasons we have a shortage of inventory is due to the high number of homeowners who are still underwater, making it difficult to sell and move as they would need to conduct a short sale or bring money to the closing. A high percentage of those homeowners are waiting it out until they are no longer underwater or in a better position to sell, contributing to the shortage of inventory. I expect this dynamic to continue through 2017."

Along with Las Vegas and Cleveland, other metro areas with at least 1 million people and at least 14.5 percent of properties seriously underwater at the end of 2016 were Detroit (17.5 percent); Chicago (16.9 percent); Orlando (15.7 percent); Memphis (14.6 percent); and Jacksonville, Florida (14.5 percent).

Hawaii, Vermont, California post highest share of equity rich properties
States with the highest share of equity rich properties at the end of 2016 were Hawaii (37.8 percent), Vermont (36.9 percent); California (36.0 percent); New York (34.9 percent); and Oregon (32.0 percent).

Among 88 metropolitan statistical areas with a population of at least 500,000 and sufficient home value and loan data, those with the highest share of equity rich properties were San Jose, California (51.6 percent); San Francisco (47.7 percent); Honolulu (39.8 percent); Los Angeles (39.2 percent); and Pittsburgh, Pennsylvania (35.8 percent).

"Clearly the big news here is the rapid drop in the number of seriously underwater homeowners between 2013 and 2016 from 197,000 (23.7 percent) to just 44,000 (4.5 percent)," said Matthew Gardner, chief economist with Windermere Real Estate, covering the Seattle market, where 32.5 percent of properties with a mortgage were equity rich as of the end of 2016 -- ninth highest among all metro areas analyzed for the report. "Simultaneously we've seen the number of equity rich homeowners climb from 168,000 to over 322,000. All of this is largely a result of Seattle's employment and income growth, which are well above the national average.

"While I'm happy to see the number of 'distressed' households drop significantly, the increase in equity rich homeowners further compounds the issue of housing affordability that we're seeing in Seattle, which will likely get worse with further increases in both home prices and mortgage rates," Gardner added.

Profile of seriously underwater properties
Some characteristics of the 5.4 million seriously underwater U.S. properties as of the end of 2016:

  • 19.4 percent of non-owner occupied (investment) properties with a mortgage were underwater as of the end of 2016 compared to only 6.8 percent of owner-occupied properties.
  • 12.6 percent of properties in high-risk flood zones were seriously underwater (above national average of 9.6 percent).
  • Based on years owned range, the highest share of underwater properties is those that have been owned between 10 and 15 years (12.0 percent), followed by those that have been owned five to 10 years (10.6 percent). The lowest share of seriously underwater properties were those owned more than 20 years (7.2 percent) followed by those owned between one and five years (8.6 percent).
  • 27.9 percent of all properties secured by loans originated in 2006 were seriously underwater at the end of 2016, the highest share of seriously underwater of any loan vintage in the last 20 years, followed by 2007 vintage (23.5 percent seriously underwater) and 2005 vintage (21.5 percent seriously underwater).

Profile of equity rich properties
Some characteristics of the 13.0 million equity rich U.S. properties as of the end of 2016:

  • 16.5 percent of properties located in high-risk flood zones were equity rich as of the end of 2016, below the national average of 24.6 percent.
  • Based on years owned range, the highest share of equity rich were for properties owned more than 20 years (45.4 percent), followed by those owned 15 to 20 years (32.4 percent).
  • 47.4 percent of all properties secured by 1998 vintage loans were equity rich at the end of 2016, the highest share of equity rich of any loan vintage in the last 20 years, followed by 1999 vintage (44.7 percent equity rich) and 2000 vintage (40.8 percent equity rich).

Denver, Orlando, Louisville buck trend with decreasing homeownership tenures
Among 316 metropolitan statistical areas analyzed for homeownership tenure, there were 54 (17 percent) where the average homeownership tenure for sellers in 2016 decreased compared to a year ago, including Denver; Orlando; Louisville, Kentucky; Tucson, Arizona; and Fresno, California.

The remaining 262 markets (83 percent) where the average homeownership tenure increased in 2016 compared to 2015 included New York; Los Angeles; Chicago; Dallas; and Houston.

Among 52 metro areas with a population of at least 1 million, those with the longest average homeownership tenure for homes sold in 2016 were Hartford, Connecticut (11.57 years); Providence, Rhode Island (10.36 years); Boston (10.04 years); San Francisco (9.92 years); and San Jose, California (9.79 years).

Among those same 52 metro areas with a population of at least 1 million, those with the shortest average homeownership tenure in 2016 were Rochester, New York (4.67 years); New Orleans (4.85 years); Louisville, Kentucky (4.93 years); Virginia Beach (5.37 years); and Atlanta (5.66 years).

Report methodology
The ATTOM Data Solutions U.S. Home Equity & Underwater report provides counts of residential properties based on several categories of equity -- or loan to value (LTV) -- at the state, metro, county and zip code level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data.

Definitions
Seriously underwater: Loan to value ratio of 125 percent or above, meaning the homeowner owed at least 25 percent more than the estimated market value of the property.

Equity rich: Loan to value ratio of 50 percent or lower, meaning the homeowner had at least 50 percent equity.

Year-End 2016 Seriously Underwater Data by State

State  Year-End 2016 Pct
Seriously Underwater
 Q3 2016 Pct
Seriously Underwater
 Year-End 2015 Pct
Seriously Underwater
U.S. Total  9.6%  10.8%  11.5%
Alabama  9.0%  11.7%  10.3%
Alaska  2.9%  3.2%  3.2%
Arizona  10.9%  11.8%  14.3%
Arkansas  11.3%  11.8%  12.0%
California  6.0%  6.6%  7.8%
Colorado  4.7%  4.8%  5.2%
Connecticut  10.9%  12.2%  10.6%
Delaware  13.1%  13.1%  13.1%
District of Columbia  8.7%  8.7%  9.0%
Florida  14.3%  16.2%  19.8%
Georgia  11.7%  12.7%  14.1%
Hawaii  5.7%  5.6%  6.3%
Idaho  4.9%  5.3%  5.9%
Illinois  16.6%  19.3%  20.7%
Indiana  12.1%  13.0%  12.4%
Iowa  8.1%  8.9%  8.0%
Kansas  5.6%  8.5%  6.1%
Kentucky  7.1%  7.7%  7.8%
Louisiana  14.5%  13.2%  13.2%
Maine  7.3%  8.3%  7.5%
Maryland  11.1%  13.9%  13.3%
Massachusetts  4.6%  5.5%  5.4%
Michigan  14.1%  16.6%  16.5%
Minnesota  4.7%  5.1%  5.5%
Mississippi  4.7%  4.8%  5.0%
Missouri  14.6%  16.7%  14.7%
Montana  4.6%  5.1%  4.3%
Nebraska  7.0%  8.3%  7.3%
Nevada  19.5%  21.5%  23.9%
New Hampshire  6.2%  7.0%  7.1%
New Jersey  11.9%  14.2%  13.3%
New Mexico  6.8%  7.1%  6.3%
New York  7.6%  9.2%  8.6%
North Carolina  8.9%  9.3%  10.0%
North Dakota  4.2%  4.4%  4.1%
Ohio  16.3%  18.2%  18.3%
Oklahoma  8.8%  9.2%  9.0%
Oregon  4.3%  5.0%  5.7%
Pennsylvania  9.8%  11.2%  10.3%
Rhode Island  8.4%  11.2%  10.9%
South Carolina  9.6%  9.8%  10.0%
Tennessee  9.4%  10.4%  10.6%
Texas  5.4%  5.9%  6.4%
Utah  4.8%  7.1%  6.6%
Vermont  3.4%  4.2%  5.7%
Virginia  6.1%  6.7%  7.1%
Washington  5.1%  5.7%  6.8%
West Virginia  9.6%  9.5%  8.1%
Wisconsin  8.8%  10.1%  10.5%
Wyoming  5.0%  3.8%  3.2%
       
       

Year-End 2016 Equity Rich Data by State

State  Year-End 2016 Pct
Equity Rich
 Q3 2015 Pct Equity
Rich
 Year-End 2015 Pct
Equity Rich
U.S. Total  24.6%  23.4%  22.5%
Alabama  16.7%  15.8%  16.0%
Alaska  15.4%  18.6%  22.5%
Arizona  22.2%  21.6%  19.7%
Arkansas  16.5%  16.2%  16.2%
California  36.0%  35.7%  33.3%
Colorado  29.3%  27.7%  24.2%
Delaware  18.8%  19.0%  19.2%
District of Columbia  29.6%  29.1%  29.6%
Florida  24.4%  23.2%  20.7%
Georgia  17.9%  17.7%  16.8%
Hawaii  37.8%  37.9%  35.8%
Idaho  21.5%  20.0%  18.5%
Illinois  16.3%  14.8%  14.3%
Indiana  14.0%  13.8%  14.1%
Iowa  16.6%  15.4%  17.1%
Kansas  27.8%  16.9%  20.1%
Louisiana  15.5%  15.5%  15.4%
Maryland  18.8%  17.0%  17.8%
Michigan  21.9%  19.5%  20.2%
Minnesota  23.1%  22.0%  21.7%
Mississippi  11.0%  11.1%  11.8%
Missouri  16.2%  14.7%  15.8%
Montana  25.7%  24.3%  27.4%
Nebraska  16.6%  14.8%  15.8%
Nevada  18.6%  17.3%  15.9%
New Hampshire  22.9%  21.7%  22.4%
New Jersey  22.9%  21.6%  22.3%
New Mexico  20.4%  19.0%  20.2%
New York  34.9%  32.2%  33.4%
North Carolina  18.5%  17.9%  17.3%
North Dakota  25.3%  21.7%  24.6%
Ohio  15.6%  14.3%  14.4%
Oklahoma  15.8%  15.4%  15.3%
Oregon  32.0%  30.2%  26.4%
Pennsylvania  23.3%  22.1%  23.2%
Rhode Island  24.3%  22.3%  23.0%
South Carolina  18.9%  18.9%  18.9%
Tennessee  22.3%  21.2%  20.4%
Texas  25.9%  23.6%  21.6%
Utah  24.0%  19.1%  19.0%
Vermont  36.9%  32.9%  31.5%
Virginia  17.8%  17.9%  17.9%
Washington  29.1%  27.6%  24.5%
West Virginia  18.5%  18.6%  20.2%
Wisconsin  21.4%  19.9%  20.1%
Wyoming  21.0%  23.7%  27.9%
       

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact ATTOM Data Solutions to purchase the full dataset behind the Year-End U.S. Foreclosure Market Report, including data at the state, metro, county and zip code level. The data is also available via bulk license or in customized reports. For more information contact our Data Solutions Department at 800.462.5193 or datasales@attomdata.com.

About ATTOM Data Solutions
ATTOM Data Solutions is the curator of the ATTOM Data Warehouse, a multi-sourced national property database that blends property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, health hazards, neighborhood characteristics and other property characteristic data for more than 150 million U.S. residential and commercial properties. The ATTOM Data Warehouse delivers actionable data to businesses, consumers, government agencies, universities, policymakers and the media in multiple ways, including bulk file licenses, APIs and customized reports.

ATTOM Data Solutions also powers consumer websites designed to promote real estate transparency: RealtyTrac.com is a property search and research portal for foreclosures and other off-market properties; Homefacts.com is a neighborhood research portal providing hyperlocal risks and amenities information; HomeDisclosure.com produces detailed property pre-diligence reports.

ATTOM Data and its associated brands are cited by thousands of media outlets each month, including frequent mentions on CBS Evening News, The Today Show, CNBC, CNN, FOX News, PBS NewsHour and in The New York Times, Wall Street Journal, Washington Post, and USA TODAY.

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