Covid-19-fueled market leads to more equity-rich homeowners
The percentage of homeowners classified as equity rich grew in the second quarter.

By Andi Medici
Tampa Bay Business Journal
Published: Aug 9, 2021

The hot housing market has not just meant windfalls for sellers. It's also increasing the percentage of homeowners who are "equity-rich," according to a new study by property database Attom Data Solutions LLC.

About 34.4% of residential properties in the United States were "equity-rich" in the second quarter of 2021, which means the total loans on the property were half or less than half of the property's total value. That's up from 31.2% in the first quarter of 2021 and up from 27.5% in the second quarter of 2020, according to Attom.

Rapidly rising home values mean fewer homeowners are seriously underwater on their mortgages, in which the loans on the home are 25% or more of the homes estimated value. That dropped to just 4.1% of total homes, or one in 24, down from 5.2% during the first quarter of 2021 and down from 6.2% during the same time in 2020.

Equity-rich properties increased and seriously underwater properties decreased between the first and second quarters of 2021 in 48 states. All 50 states showed improvement over the second quarter of 2020. The improvements were the largest in two years and provided yet another sign the housing market resisted the damage Covid-19 caused in other sectors over the last 18 months.

The gains in equity came as median home prices rose 11% in the second quarter over the first, and 22% year-over-year, according to Attom.

“The huge home-price jumps over the past year that helped millions of sellers earn big profits also kicked in big-time during the second quarter for other owners who saw their typical equity improve more than at any time in the last two years. Instead of the virus pandemic harming homeowners, it’s helped create conditions that have boosted the balance sheets of households all across the country,” said Todd Teta, chief product officer with Attom, in a press release announcing the data. “There are still a lot of questions hanging over the near future of the U.S. housing market, with some connected to how well the economy keeps recovering from the pandemic, and some not. We’ll keep watching those closely, though for now, there are few assets that keep on giving so much as homeownership.”

The biggest gains in the share of equity-rich homes over the last quarter came from Arizona, which saw the share of equity-rich homes grow from 16.3% to 39.7%, while Massachusetts saw its share grow from 25.3% to 41.7%. The only state that saw a decrease was Maryland, which slipped from 23.5% of homes to 23.2% of homes. West Virginia saw no change, remaining at 19.8%.

Home sellers are also still seeing big profits from the sale of their homes, although the return on investment slipped in the second quarter of 2021, according to a separate study from Attom. But the quarter-by-quarter drop in profit margins — even if they remain high — could be another indicator the housing market may be hitting a turning point, according to various metrics. While the median price for actively listed houses jumped 12.7% in June 2021 over the same time in 2020, to $385,000, there is also data showing more homes have sold and inventory has increased.

Meanwhile, Covid-19 has changed how homes are marketed and listed. In 2019, the most popular home features and amenities in home listings were granite countertops, hardwood floors and stainless steel appliances. But now, after 18 months of a global pandemic, the top amenities listed in homes for sale were garages, walk-in closets and full bathrooms, reflecting the changing desires of potential buyers.