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Where are mortgaged properties going underwater?

DON FENLEY • Feb 18, 2019 at 12:00 AM

Equity-rich is a sweet spot for mortgage holders and there were almost 20,000 of them in the Tri-Cities during the last three months of 2018. And when combined with mortgaged properties that are seriously underwater, it’s a snapshot of how the housing market is performing. During the fourth quarter (Q4) last year, there was a little more than 15,000 gasping for financial breath.

From a regional trends perspective, the separation between the two metrics is the closest they have been in five years. The share of equity-rich properties has declined while the number of those that are seriously underwater has increased.

Both indicators are part of Attom Data Solution’s Year-End Equity, Underwater Report. The analysis set the national benchmark for equity-rich properties at 25.6 percent and 8.8 percent for those that are seriously underwater.

Equity-rich is defined as properties with a loan to value ratio of 50 percent or lower, meaning the owner had at least 50 percent equity. Seriously underwater is defined as a property with a loan to value ratio of 125 percent or above, meaning the owner owned at least 25 percent more than the estimated market value of the property.

Only Johnson County can now claim a share of equity-rich properties greater than the national average. That’s a big departure from the equity status from several local counties.

For example, Sullivan County used to consistently have the highest share of equity-rich properties in the Tri-Cities region. But that share has declined from 38 percent in early 2014 to 23.3 percent in Q4. Much of the decline can be seen in existing home resales and the uptick in remodeling trends. Sullivan County was one of the hottest housing markets in the region last year. County single-family resales were up 28.5 percent last year while the average sales price increased 8.2 percent. The county’s market share of resales was higher than its 2017 annual share every month last year and much of that growth can be attributed to owners tapping their equity.

Don Fenley is a semi-retired journalist. For more check out his blog, Core Data, at www.donfenley.com.

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