The number of underwater homes shrank in the fourth quarter of 2017, despite the turbulent hurricane season, according to the 2017 U.S. Year-End Home Equity and Underwater analysis from ATTOM Data Solutions.
Hurricane Harvey started off the season by hitting the Texas coast at the end of August and into the beginning of September, wreaking havoc on South Texas and destroying thousands of homes. Then there is the added damage caused by hurricanes Irma and Maria which followed.
This led to an uptick in early-stage delinquencies, according to a recent Loan Performance Insights Report from CoreLogic, a property information, analytics and data-enabled solutions provider.
But despite these natural disasters, the share of properties with a mortgage seriously underwater fell from 9.6% last year to 9.3% in the fourth quarter of 2017. But while this is still a decrease, it is the smallest annual decline since ATTOM began tracking in the first quarter of 2012.
This increase, despite the natural disasters with destroyed thousands of homes, is probably due, in large part, to rapidly increasing home prices. The latest Home Price Index from CoreLogic shows home prices increased 6.6% overall in 2017, and are expected to continue climbing in 2018.
During the fourth quarter, 25.4% of all homes with a mortgage were reported as equity rich, or having a loan-to-value ratio of 50% or less. This is up from 24.6% in the fourth quarter of 2016, but represented the smallest year-over-year increase since the third quarter of 2015.
The share of homeowners with at least 20% equity in their home decreased 1.1 percentage points from last year, while those who had between 10% equity and 10% negative equity increased 1.1 percentage points from last year. ATTOM explained this indicates more homeowners are leveraging their equity to sell and move up into another home, or by refinancing.