According to a report by ATTOM, the percentage of mortgaged homes that were seriously underwater increased slightly in the first quarter of 2024, with 2.7% of all residential mortgages falling into this category. Serious underwater mortgages are defined as those with a loan-to-value ratio of 125% or more, indicating that homeowners owe at least 25% more than the estimated market value of their properties. This represents a small increase from the previous quarter, when 2.6% of mortgages were seriously underwater. However, it should be noted that while still relatively low, this figure is higher than it was in the same period last year, when only 2.2% of mortgages were seriously underwater. There were also notable decreases in the percentage of seriously underwater mortgages in several states between the fourth quarter of 2023 and the first quarter of 2024, including Missouri, Mississippi, Arizona, and Hawaii.
In contrast, a higher proportion of homeowners – 45.8% – were considered equity-rich in the first quarter of 2024, according to ATTOM’s report. While this figure is down slightly from the previous quarter (when it stood at 46.1%) and the same quarter in the previous year (when it was 47.2%), it remains comparatively high.
Rob Barber, CEO for ATTOM, commented that “the windfalls [of equity] are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated.” However, he cautioned against drawing definitive conclusions about the market’s direction given the recent slowdown in activity during traditionally quieter periods like fall and winter.
Overall, the report suggests that although home equity continues to provide benefits for many homeowners, there are signs that the market may be cooling somewhat. As home prices continue to rise alongside mortgage rates, some homebuyers may find themselves struggling to afford the properties they desire. Those interested in purchasing a home are advised to explore their options carefully and consult a reputable mortgage lender such as Credible to determine the most suitable financing solution for their needs.
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