The latest report from property and real estate data firm ATTOM has revealed some interesting trends in the U.S. housing market. The report indicates that the percentage of mortgages classified as “Seriously underwater” saw a slight increase in the first quarter of 2024, while the proportion of “Equity-rich” mortgages experienced a decline for the third consecutive quarter.
What exactly does it mean to have a mortgage that is “Seriously underwater”? According to the report, this term refers to mortgages with a loan-to-value ratio of 125% or more. In simpler terms, it means that property owners owe at least 25% more than the estimated market value of their property. In the first quarter of 2024, the percentage of seriously underwater mortgages in the U.S. rose from 2.6% to 2.7% of all residential mortgages.
Interestingly, the states with the smallest shares of seriously underwater mortgages were Vermont, Rhode Island, New Hampshire, California, and Massachusetts. On the flip side, among the 107 metropolitan areas with populations exceeding 500,000 residents, Baton Rouge and New Orleans in Louisiana had the largest shares of seriously underwater mortgages, followed by Jackson, Mississippi, Little Rock, Arkansas, and Syracuse, New York.
But it’s not all doom and gloom in the housing market. The report also highlighted the growing trend of buyers taking on riskier adjustable-rate mortgages as affordability becomes more challenging. Additionally, the percentage of residential mortgages classified as “Equity-rich” (where owners have a loan-to-value ratio of 50% or lower) declined to 45.8% in the first quarter of 2024. This marks a decrease from 46.1% in the previous quarter and 47.2% from the same period in 2023.
Despite these fluctuations, industry experts are cautiously optimistic about the future of the housing market. While acknowledging the recent declines in equity-rich mortgages, they emphasize that it’s too early to draw definitive conclusions about where the market is headed. The upcoming Spring buying season is expected to provide valuable insights into whether these trends represent a new long-term market pattern or simply temporary fluctuations.
In conclusion, the housing market is a complex and ever-evolving landscape. As buyers navigate the challenges of affordability and equity, staying informed about the latest trends and forecasts is crucial for making informed decisions. Whether you’re a homeowner, prospective buyer, or industry professional, keeping a pulse on market developments can help you navigate the real estate terrain with confidence.
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