What's it take to be in the home equity elite?
WASHINGTON -- Americans readily gossip about home values -- "Did you hear the crazy high price the house down the street sold for?" "Did you hear how little our neighbors were forced to take on their sale?"
But people are much more reticent when it comes to home equity, which is not surprising: Prices and assessed values are public information. Equity holdings are not public, and they take some effort to figure out. Equity is intimate financial information, like a bank account or retirement fund balances, and represents a major part of most owners' net worth.
So it tends to be closely held.
All of which makes a new statistical report on the equity levels of owners of more than 150 million homes with mortgages intriguing. The report comes from ATTOM Data Solutions, a research and analytics firm that tracks equity movements on a quarterly basis using public property information and proprietary automated valuation systems. According to ATTOM researchers, 34 percent of all American homeowners have 100 percent equity in their properties -- they've either paid off their entire mortgage debt or they never had a mortgage.
Equity is the difference between the current market value of your home and the debt you've got against it. If you own a $400,000 house and your mortgage debt is $150,000, you've got $250,000 in equity. During the five years following the housing bust in 2007, when the real estate recovery began taking hold, American homeowners lost billions of dollars in equity. But today many have recouped all or most of it, and the Federal Reserve estimates that homeowners now control an astounding $1.37 trillion in equity wealth.
The latest ATTOM report opens a window on equity -- where and in what types of homes equity holdings are especially large and where they tilt negative, with property values well below what owners could expect to get from a sale.
Some quick highlights:
-- Fourteen million American homeowners, roughly one of every four owners with a mortgage, are "equity rich": Their debt is less than 50 percent of their current home value. Thanks to rapidly rising home prices, that number has been spiraling; 1.6 million owners became equity rich last year alone.
-- On the flip side of the ledger, 5.4 million owners (9.5 percent of the total) are in serious negative equity positions, owing at least 25 percent more on their mortgages than their homes could command in the marketplace. But rising home prices are bailing out large numbers of the equity deficient: their number is down by more than 1.2 million in the last 12 months.
-- The geographical distribution of high and low equity homes is stark -- and not necessarily where you might have guessed. At the top of the list of ZIP codes with the highest share of equity rich homes is a neighborhood in Pittsburgh, Pennsylvania (ZIP code 15201, Lawrenceville), where by most measures home prices are moderate. The median list price this year is $277,000 -- not a whole lot of McMansions in sight. Yet three out of every four owners there are equity rich.