‘Underwater’ Properties Drop in Q3

a large house with a driveway in front of it

The Home Equity & Underwater Report released by RealtyTrac calculates the number of homes where the loan secured by the property is at least 25 percent higher than its market value. It found that underwater homes represented 12.7 percent of all mortgaged properties in Q3. That’s a significant drop from this year’s previous quarter, when 7,443,580 homes—13.3 percent of all homes with a mortgage—were underwater. In fact, Q3’s underwater report found fewer underwater homes than at any time since RealtyTrac began tracking data in 2012. Things have improved quarter by quarter since 2012, when over 28 percent of all homes with a mortgage were underwater—12,824,729 properties in all.

One-Third of Distressed Homes Seriously Underwater

Despite the fact that one-third of distressed properties are seriously underwater—with the number of liens well over 25% of the property value—that’s a 1% drop compared to the previous quarter and 5.5% less than one year ago. On the other hand, homes that were foreclosed with positive equity value increased around 1% from Q2 and nearly 5% from one year ago.

Homes at Risk of Being Underwater

Taking a closer look at the data, one sees that homes in certain price ranges are more likely to be underwater than others. Of properties with an estimated market value less than $200,000, over 20% were seriously underwater. Only 5% of homes with values over $750,000 were seriously underwater. 17.2 percent of homes that have been owned between 5-10 years are seriously underwater, which is the highest share since RealtyTrac began collecting data in 2012. Conversely, nearly 40% of homes that have been owned more than 20 years are equity rich—with the value of the property greater than the outstanding loans.

Equity-Rich Properties

The number of equity-rich properties varies greatly depending not only on when the property was purchased, but also on the estimated market price. The data is telling us that homeowners with more expensive homes are faring better than those with less expensive properties. Those who have owned their homes for more than 20 years are also doing better than those who have bought their homes in the last 5 to 10 years. 14.3% of properties with estimated market values of less than $200,000 are equity rich, while 38% of those worth more than $750,000 are equity rich.

Working with Lakeside Title

Lakeside Title provides complete title services to realtors and lenders in Maryland, Washington D.C, and Virginia. For more information on how we streamline mortgage closings, refinances, and more, please visit our homepage.

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