Arkansas among top states with highest share of ‘seriously underwater’ properties

Arkansas is among the U.S. states with the highest share of properties with mortgages that were “seriously underwater” at the end of the first quarter, according to a new report by housing data analytics firm ATTOM Data Solutions.

The new U.S. Home Equity & Underwater Report, released May 9, shows that 5.2 million or 9.1% of U.S. properties at the end of the first quarter were seriously underwater, where the combined balance of loans secured by a property was at least 25% higher than the property’s estimated market value. That total is up by more than 17,000 properties from a year ago.

“With home prices increasing at a slower pace in 2018, than in previous years, the potential for people to climb out from mortgages that are underwater or advance into equity-rich territory, tends to be reduced,” said Todd Teta, chief product officer at ATTOM Data Solutions. “However, only one in 11 mortgages are seriously underwater today, compared to nearly one in three during the depths of the recession. Although, if the latest trend continues, it will raise another clear signal of a market slowdown, which will be good for buyers, but not so good for sellers.”

Tata said if the pattern of the past few years takes hold – with levels of underwater and equity rich mortgages turning around – it will mean the market remains strong for sellers, with fewer needing to get out from under financial distress.

Nationwide, the three states with the highest share of seriously underwater properties were Louisiana at 20.7%, followed by Mississippi and Arkansas at 20.7% and 17.1%, respectively.  West Virginia and Illinois at 16.2% rounded out the top five.

Among the 99 metropolitan statistical areas (MSAs) analyzed in the report, those with the highest share of seriously underwater properties were Baton Rouge, La., at 21.3%, Scranton, Penn., at 20%; followed by Youngstown and Toledo, Ohio at 19.2% each, and New Orleans at 17.8%.

States with the highest share of equity rich properties were California at 43%, followed by Hawaii (38.1%); New York (34.2%); Washington (33.2%); and Vermont (32.8%). Among the 99 top MSAs, those with the highest share of equity rich properties were all located in California, including San Jose, San Francisco and Los Angeles at 86.3%, 58.4% and 48.1%, respectively.