A pandemic housing boom that’s driving up home prices across the country has reduced the number of “seriously underwater” mortgages in the U.S. by as much as 34 percent, a new report indicates.
A home-equity report by data firm Attom shows the number of seriously underwater homes — defined as properties with secured loans that are at least 25 percent higher than the home’s market value — has dropped from 3.5 million at the end of 2019 to 2.25 million as of July 1, according to an analysis by Bloomberg News.
Meanwhile, the number of homes that are “equity-rich” — those with market values that are at least double the outstanding loan balance — increased by 4.2 million over the same period and now make up more than one-third of all mortgaged homes nationwide.
The Chicago area saw the biggest decline in underwater properties. The number of seriously underwater homes in the area has fallen by more than 50,000 since the end of 2019, though 7.4 percent remain seriously underwater.
The New York area also saw a major decline, losing 33,467 seriously underwater homes. Just 3 percent of mortgaged homes in the metro area remain seriously underwater, the report indicated.
In Miami, the housing boom has rescued 32,078 homes from seriously underwater status, leaving 3.1 percent of area homes under the classification. Los Angeles lost 19,813 seriously underwater homes, leaving the area with just 1.2 percent of mortgaged homes seriously underwater.
Baton Rouge is currently the leader in debt-trapped homes, with 12.7 percent of mortgages considered to be underwater. The areas with the next-highest shares of seriously underwater homes are New Orleans, Toledo, Ohio and Youngstown, Ohio.
[Bloomberg News] — Holden Walter-Warner