San Jose has the third highest ‘stock-rich’ homes in the United States

By Anna Bahney, CNN Business

(CNN) – Sky high real estate prices have made a growing number of homeowners “equity rich,” according to a home equity report. This means that they have at least 50% of the equity in their property, or in other words, the amount they owe on the house does not exceed half of the market value of the property.

In the last quarter of 2021, 42% of residential properties with an underlying mortgage were considered equity-rich, according to a report by Attom, a real estate data company. This figure was up from 30% in the fourth quarter of 2020.

“As home prices continued to rise, so did the accumulated equity in residential properties, to the point that nearly half of all mortgage payers nationwide ended up in equity-rich territory,” he said. said Todd Teta, Chief Product Officer at Attom.

Only 3% of loans were seriously underwater, a situation in which the homeowner owed at least 25% more on their loans than the home was worth, Attom reported.

The increase in home equity is an indication of the strength and stability of the housing market, even as prices rise into the stratosphere. At the end of last year, equity-rich houses outnumbered seriously-underwater houses by 13 to 1, according to the report.

While no one is certain how long the boom will last, strong equity is good for the economy and owners, Teta said.

“For now, homeowners are sitting well as the wealth they have hidden in their homes continues to grow,” he said.

Rising prices, rising equity

Median home prices rose well above $300,000 and typical home values ​​soared more than 10% across most of the country last year. This price hike helped widen the gap between what homeowners owed on their mortgages and property values, the report said.

The largest increases in the share of equity-rich homes were seen in the South and West.

Tennessee, where the share of mortgaged homes considered equity-rich rose from 41.4% in the third quarter to 47.2% in the fourth quarter, saw the biggest jump, followed by North Carolina, Nevada , Georgia and Arizona.

The most equity-rich city was Austin, Texas, with 70.6% equity-rich mortgage holders, followed by Boise, Idaho; San Jose, California; Spokane, Washington; and Salt Lake City, Utah.

According to the report, the cities with the fewest equity-rich properties include Jackson, Mississippi, where only 17% of homes are equity-rich, Baton Rouge, Louisiana and Wichita, Kansas. These three cities also had the most mortgages seriously underwater.

According to the report, the largest declines in the share of severely underwater properties were seen in the South and Midwest.

Mississippi saw the largest decline in seriously underwater mortgage homes, falling from 17.7% in the third quarter to 12.2% in the fourth quarter. It was followed by Maine, Iowa, West Virginia and Arkansas.

In some states, the share of severely underwater homes increased, including Wyoming, which rose from 11.5% to 14.3% quarter over quarter, followed by Connecticut, Arizona and from Utah.

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