Many homeowners are becoming equity rich because they’re staying in their homes longer, according to the Q3 2016 U.S. Home Equity and Underwater report from ATTOM Data Solutions, a fused property database. To be equity rich, homeowners must have a loan-to-value ratio of at least 50%.
In fact, 23.4% of all homeowners with a mortgage are now considered equity rich, an increase of 2.6 million from last year to 13 million in the third quarter, according to the report.
The number of homeowners who are seriously underwater (have an LTV of 125 or higher) decreased from last year by 854,000 homeowners to more than 6 million this year. This represents 10.8% of all homeowners with a mortgage.
In the second-quarter report, 6.6 million properties were seriously underwater, which was 11.9% of total properties at the end of the second quarter.
“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,” said Daren Blomquist, ATTOM Data Solutions senior vice president.
“Median home prices increased on a year-over-year basis for the 18th consecutive quarter in Q3 2016, and 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 said. “As homeowners stay in their homes longer before moving up, they are amassing more home equity wealth.”
The metropolitan statistical area with the highest share of equity rich homeowners, out of 88 areas with a population of 500,000 or more, is San Jose with 55.7%. Honolulu came in second with 39.3%, followed by Los Angeles with 38.2% and Pittsburgh with 34.5%.
Some homes, however, still showed a large percentage of homes still seriously underwater. Of those same 88 metros, the one with the most share of seriously underwater homeowners is Las Vegas with 25%, followed by Akron, Ohio with 24.2%, Cleveland, Ohio with 22.8%, Toledo, Ohio with 21.7%, Dayton, Ohio with 20.2%, Detroit with 20% and Lakeland-Winter Haven, Florida with 20%.