Equity in U.S. housing will increase in the first quarter of 2022

Americans have more equity in their homes, thanks to a red-hot housing market that is pushing up the value of their properties, new research shows.

In the first quarter of 2022, 44.9 percent of homes in the United States were considered “equity-rich,” meaning the balance on the home loan was 50 percent or less of the estimated market value, according to a new report from Attom, a real estate data analysis firm.

That’s slightly higher than the 41.9 percent recorded in the fourth quarter of 2021 and a jump from 31.9 percent in the first quarter of 2021, according to Attom, which analyzed data on government mortgages and deed-of-trust for more than 155 million U.S. properties.

The increase in equity is causing some owners to pay out and relocate, said Rick Sharga, executive vice president of market intelligence at Attom.

“What we think is happening is that people are leaving high-cost, high-tax states, raising equity and buying a house in a low-cost state,” Sharga said, adding that more than a third of U.S. home sales in fourth quarter 2021 was cash purchases, higher than usual.

But as mortgage rates rise, some homeowners who already have low interest rates remain seated. “It’s being driven by boomers who want to age in place,” he said, with more owners investing in home repairs instead of selling. “This inventory will not return to the market.”

Higher values ‚Äč‚Äčalso help reduce the number of homes that are “seriously underwater”: In the first quarter of this year, 3.2 percent of the mortgaged homes, according to Attom, had a loan balance that was at least 25 percent higher than the property’s estimated market value , a decrease from 4.7 percent the year before.

“Being underwater does not mean you go on foreclosure,” said Mr. Sharga and pointed to pandemic relief measures such as the Moratorium and the CARES Act, which helped keep Americans in their homes. “Last year was the lowest level of foreclosure in history.”

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