U.S. Housing Wealth Diverges Between ‘Underwater’ and ‘Equity Rich’

(Bloomberg) -- More than a decade after the recession, one in 11 mortgaged properties in the U.S. is considered "seriously underwater," according to the home equity report by ATTOM Data Solutions.

This equates to more than 5.2 million properties where the combined balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value -- an increase of almost 600,000 from the post recession low reached in the third quarter of 2017.

In 32 zip codes, with a minimum of 2,500 mortgaged properties in each, more than half are "seriously underwater."

“With home prices increasing at a slower pace in 2018, than in previous years, the potential for people to climb out from mortgages that are underwater or advance into equity-rich territory, tends to be reduced,” said Todd Teta, chief product officer at ATTOM Data Solutions.

The top five zip codes with the highest share of seriously underwater properties were 53206 in Milwaukee, Wisconsin (70.5% seriously underwater); 08611 in Trenton, New Jersey (68.9%); 69361 in Scottsbluff, Nebraska (63.4%); 60426 in Harvey, Illinois (63.1%); and 61104 in Rockford, Illinois (62.8%).

``We predict a very slow recovery especially with home prices slowing up a bit'' for these areas to recover.

Home Wealth Concentration

Among the same cohort of 7,639 U.S. zip codes, 408 of them are "equity rich" -- so classified when the loan-to-value ratio is 50 percent or lower for more than half of all properties in the area.

Not only do California zip codes dominate the list numerically, they also occupy the top of the ranks by taking 89 of the top 100 spots. These 89 California zip codes hold 471,696 properties where the property owner had at least 50 percent equity.

The best of the pack was 94040 in Mountain View -- where 82.3 percent of the mortgaged homes were valued at $100 or more for every $50 owed, followed by 94116 in San Francisco (81.7%); 94087 in Sunnyvale (81.6%); 94085 in Sunnyvale (81.1%); and 94122 in San Francisco (81.0%).

Tri-State Area

New York

• Among 316 New York zip codes with at least 2,500 properties with mortgages, 1.7% are `underwater' while 11.8% are `equity rich'
• 2 zip codes hold properties that are 25% or more `underwater'
  • Both of the highest `Underwater' zip codes are in New York City -- 10128 in Manhattan and 11207 in Brooklyn
• 156 zip codes hold properties where one third or more of the homes are `equity rich'
  • `Equity rich' area are led by four Brooklyn zip codes (11220, 11228, 11214 and 11219) where more than 70% of the homes are equity rich

New Jersey

• Among the 260 New Jersey zip codes with at least 2,500 properties with mortgages, 5.4% are `underwater' while 11.5% are `equity rich'
• 12 zip codes hold properties where an aggregate are 30% or more `underwater'

  • `Underwater' zip codes are led by Trenton, NJ (08611) 68.9%; Philadelphia-Camden-Wilmington, PA-NJ-DE-MD (08104) 58%, and Atlantic City-Hammonton, NJ (08232) 55.6%

• 17 zip codes hold properties where 33% or more of the homes are `equity rich'

  • `Equity rich' areas are led by Avalon (08202) 43.6%, Beach Haven (08008) 41.4%, and Jersey City (07307) 41.1%

Connecticut

• Among 124 Connecticut zip codes with at least 2,500 properties with mortgages, 6.6% are `underwater' while 9.0% are `equity rich'
• In three Harford area zip codes more than 45% of the properties are `underwater' -- 06112, 06114, and 06106
• Only 7 zip codes hold properties where one quarter or more of the homes are `equity rich'
  • `Equity rich' areas are led by Greenwich (06831 and 06830), Old Saybrook (06475), Darien (06820), Westport (06880), New Canaan (06840) and Old Lyme (06371)

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net;Marie Patino in New York at mpatino14@bloomberg.net

To contact the editors responsible for this story: Debarati Roy at droy5@bloomberg.net, Wei Lu

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