WASHINGTON — The big winners in the current housing market are those who quietly sat back and let their equity build, and in Washington, many homeowners with mortgages are in a very enviable position.
“The longtime homeowners and the homeowners who bought near the bottom (of the market) have both seen a huge increase in the equity that they have in their homes,” Daren Blomquistar of Attom Data Solutions told WTOP.
Attom Data Solutions, which curates property information to increase real estate transparency, said one in five Washington homeowners who still has a mortgage is “equity rich,” meaning the owner owes the bank 50 percent or less of what the home’s potential sales price.
Growth in home equity turned out to be a contributor to the housing crisis a decade ago, when homeowners were treating their homes like piggy banks and tapping equity for often not-responsible uses. When home values fell, some were caught upside down, and others with adjustable rate Home Equity Line of Credit loans with which they couldn’t keep up.
Homeowners are more cautious when considering a home equity line of credit this time around.
“They’ve been steadily increasing, but they’re less than half the number we were seeing at the peak of the last housing boom in terms of the number of those home equity lines that were being originated,” Blomquist said.
Many equity-rich homeowners, especially older ones, are simply using that leverage to sell, then buy with a hefty down payment, or even use the equity to downsize to a mortgage-free lifestyle.
Markets where home values have risen the most are where there are the most equity-rich homeowners.
In San Jose, California, where the median price of a home now tops $1 million, 66.1 percent of mortgaged homeowners are equity rich. In San Francisco, 56 percent are. In Honolulu, 43.1 percent are, and in Seattle, 39.1 percent of homeowners have at least 50 percent equity in their homes.
On the other end of the spectrum, there are still a troublesome number of homeowners across the country who remain upside down on their mortgages. The highest share of seriously underwater properties, where the home’s value is at least 25 percent less than the mortgage, are in the following locations:
- Scranton, Pennsylvania, at 21.9 percent;
- Baton Rouge, Louisiana, at 19.9 percent;
- Youngstown, Ohio, at 19.5 percent;
- New Orleans, at 19.5 percent;
- Toledo, Ohio, at 18 percent.