By Kerry Smith
Most Florida homeowners have significant equity. Many own their home outright, and of those with a mortgage, 62.8% owe lenders less than 50% of market value.
ORLANDO, Fla. – While home price increases have slowed, they have not stopped. According to ATTOM’s third-quarter report, 62.8% of Florida homeowners with a mortgage have at least 50% equity in the property – a number that does not include the roughly 35.2% of homeowners who don’t have a mortgage.
Nationwide, the percentage of equity-rich homeowners is a weaker 48.5%. That’s up from 48.1% in the second quarter of 2022 and 39.5% year-to-year. The latest increase lagged other recent quarters, but it’s still a gain.
“Even though home price appreciation has slowed down dramatically in recent months, homeowners have continued to build equity,” says Rick Sharga, executive vice president of market intelligence at ATTOM. “And it appears that many of those homeowners have decided to stay where they are rather than purchase a new home and are beginning to tap into that equity, as the number of home equity lines of credit (HELOCs) issued in the second quarter of 2022 rose by 43%” year-to-year.
The report also found that 2.9% of mortgaged homes, one in 35, was seriously underwater in the third quarter of 2022. A home is considered seriously underwater if its combined estimated balance of loans is at least 25% more than the property’s estimated market value. Still, that 2.9% is the same as the quarter before and down from 3.4% year-to-year.
Florida, however, has even fewer seriously underwater properties and lags only two other states. Vermont has the fewest seriously underwater owners (0.9%), followed by Rhode Island (1.1%) and Florida (1.2%), which is also the same in Washington and New Hampshire.
Overall, 94.3% of U.S. homeowners with a mortgage had at least some equity in the third quarter compared to 92.9% a year earlier and 87.7% in the third quarter of 2020 – and that’s in addition to those who have paid off their mortgages.
Florida mentions in ATTOM’s 3Q report
- Equity-rich states: The West had the highest levels of equity-rich properties around the U.S. – six of the top 10. The top 5 include: Vermont (75.9% of mortgaged homes), Idaho (65.8%), Arizona (63.4%), Florida (62.8%) and Utah (62%).
- Equity-rich metros: The West and South dominated this list with all but one metro in the top 25. Of the five cities that top the list, three are in Florida: Austin, Texas (71.6% equity-rich); Sarasota-Bradenton (71.6%); San Jose, California (70.6%); Fort Myers (68.5%) and Tampa (68.3%). The leader in the Northeast region again was Portland, ME (63%) while the top metro in the Midwest continued to be Grand Rapids, MI (51.9%).
- Equity-rich counties: Of counties with populations of at least 500,000, the highest equity-rich rates were Travis County (Austin), Texas (74.1% equity-rich); Pinellas County (Tampa) (72.6%); Santa Clara County (San Jose), California (71.5%); San Mateo County, California (outside San Francisco) (69.6%) and Williamson County, Texas (outside Austin) (69.6%).
- Equity-rich zip codes: 46% of U.S. counties had zip codes in which at least half the homeowners with a mortgage were equity rich, and 32 of the top 50 were in Florida and Texas. The top five include: 83333 in Hailey, Idaho (87.7% of mortgaged properties were equity-rich); 02539 in Edgartown, Massachusetts (86.9%); 34108 in Naples (85.2%); 02568 in Vineyard Haven, Massachusetts (84.9%) and 34102 in Naples (84.9%).
Homebuyers hoping for a wave of foreclosures similar to the housing crisis and Great Recession seem to be out of luck. According to ATTOM, the “vast majority of homeowners facing foreclosure have at least some equity.”
Foreclosures
Only about 227,100 U.S. homeowners were facing possible foreclosure in 3Q (0.4%) of the 58.1 million outstanding mortgages in the U.S. And of those 227,100 owners facing foreclosure, about 208,700 (92%) had at least some equity in their homes.
“One of the reasons we don’t believe there will be another huge wave of foreclosures is that the overwhelming majority of financially-distressed homeowners do have positive equity,” Sharga says. “If these borrowers can’t leverage the equity to refinance their current mortgage, they at least have the option of selling the property rather than losing their equity to a foreclosure auction.”
Sharga says Great Recession-era homeowners did not have that option since a large number were underwater on their mortgages.
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