Increased home values lead to equity-rich gains in Q2
Homeowner wealth has rebounded significantly after a period of stagnation, as equity levels piggybacked on some of the biggest home-price spikes seen in recent years, according to ATTOM’s new report.
The report found that 49.2% of mortgaged homes in the US were considered “equity-rich” in the second quarter, meaning homeowners had at least twice the equity of their mortgage balance. This matched a peak reached in the Spring of last year and up from 45.8% in the first quarter, reversing a series of three straight quarterly declines.
“Homeowner wealth took a notable turn for the better during the second quarter as equity levels piggybacked on some of the biggest home-price spikes we’ve seen in recent years,” ATTOM chief executive officer Rob Barber said.
The median national home price jumped 9% in the second quarter to a record $365,000, widening the gap between home values and mortgage balances.
While homeowner equity is on the rise, the number of seriously underwater mortgages continues to decline. The report found that just 2.4% of mortgaged homes were seriously underwater in the second quarter, down from 2.7% in the previous quarter. This represents the lowest level since at least 2019.
ATTOM attributed the market rebound to several factors, including limited housing supply, increased Spring buyer demand, relatively stable mortgage rates around 7% for 30-year fixed loans, a national unemployment rate below 4%, and strong investment markets.
“Supplies of homes for sale remain limited these days and buyer demand is typically elevated during the summertime,” Barber added. “So, it should be no surprise if home values go even higher and take equity along for the ride.”
The report also showed that the portion of equity-rich mortgages increased in 48 of the 50 states quarter over quarter, commonly by more than two percentage points. On an annual basis, equity-rich levels rose in 31 states, with the nationwide figure matching the 49.2% recorded in Q2 2023.
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Similarly, the share of seriously underwater mortgages improved in most states, decreasing nationwide to one in 42 mortgaged homes from one in 37 in the first quarter of 2024, and one in 36 a year ago.
This rate is significantly lower than the one in 15 ratio recorded in 2019. The decline was observed in 47 states quarterly and 37 states annually.
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