Real Estate

Home loans seriously underwater hit new low

Decreased by 1 million in past year

At the end of the year, 2016 held 1 million less seriously underwater properties than the year before, according to the Year-End 2016 U.S. Home Equity and Underwater Report from ATTOM Data Solutions, a fused property database.

Rising home prices and low inventory prices is causing home buyers to struggle, however current homeowners are reaping the benefits of this increasing equity.

At the end of 2016, 5.4 million properties were seriously underwater, the combined loan amount secured by the property was at least 25% higher than the property’s estimated market value, according to the report.

“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,” ATTOM Senior Vice President Daren Blomquist said. “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.”

These 5.4 million properties represented 9.6% of all U.S. properties with a mortgage, down from the 10.8% of properties at the end of the third quarter and down from 11.5% the year before. This is the lowest percentage since ATTOM began tracking in 2012.

“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 said. “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.”

The report is based on publicly recorded mortgage and deed of trust data collected and licensed by ATTOM nationwide along with an industry standard automated valuation model updated monthly in the ATTOM Data Warehouse of more than 150 million properties.

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