Add The New York Post on Google More American homeowners now owe substantially more on their mortgages than what their properties are worth, as a key measure of housing-market distress moves in the wrong direction.
The share of US homeowners who are “seriously underwater” on their mortgages climbed to 3.2% in the second quarter, up from 2.7% a year earlier, according to a new state-by-state analysis from real estate data firm ATTOM.
That means the combined balance of loans secured against the property is at least 25% greater than what the home itself is estimated to be worth.
The problem worsened year-over-year in 33 states and Washington, DC — but nowhere was the shift as dramatic as Minnesota.
The North Star State vaulted to the top of the nation’s underwater rankings, with a whopping 12.1% of mortgaged homes seriously underwater in the second quarter.
That’s up from just 3% in the first quarter and 2.6% a year earlier — meaning Minnesota’s rate has more than quadrupled in just 12 months.
Louisiana ranked second, with 10.3% of mortgaged homes seriously underwater. Unlike Minnesota, however, the state’s situation has actually improved: Its rate fell from 11.8% in the previous quarter and 11.9% a year earlier.
Iowa landed in third place at 7.8%, up from 6% in the first quarter and 5.9% a year ago.
Mississippi and Arkansas rounded out the five states with the highest shares, at 6.4% and 6%, respectively.
The deterioration comes as another measure of homeowners’ financial cushion is also moving in the wrong direction.
Just 41.1% of mortgaged US homes were considered “equity rich” during the second quarter — meaning the amount owed on the property was no more than half its estimated value — down from 43.3% during the first quarter and 47.4% a year earlier.
That marked the fourth consecutive quarterly decline and brought the share of equity-rich homes to its lowest level in nearly five years, according to ATTOM.
“These two measures of home equity strength, the rates of equity-rich and seriously underwater homes, remain healthier than they were prior to 2020,” ATTOM CEO Rob Barber said in the report.
“However, both have been moving in less favorable directions over the past year, suggesting a trend worth watching.”
New York homeowners, meanwhile, are largely bucking the troubling national trend.
Just 1.5% of mortgaged properties in the Empire State were seriously underwater in the second quarter, down from 1.9% during the first quarter and 2% a year earlier.
New Jersey also fared relatively well, with 1.6% of mortgaged properties seriously underwater, down from 1.8% the previous quarter and 1.7% a year ago.
Vermont recorded the lowest underwater rate in the country, at just 0.9%.
