The State With the Most Homes Worth Less Than Their Mortgages

By Douglas A. McIntyre Published Aug 6, 8:30AM EDT

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The State With the Most Homes Worth Less Than Their Mortgages — © Amonggiants / Wikimedia Commons

Home prices have surged over the past year. The carefully follow S&P Case-Shiller home price index shows that, in May, home prices were more than 16% higher than in the same month last year. In Phoenix, the increase topped 20%. Some of the rise is due to people leaving expensive coastal cities like Los Angeles, New York and San Francisco. One example is the home price increase in Idaho driven by west coast residents. There are two other factors. One is historically low interest rates. Another is that people can work from home, which makes relocation more realistic.
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One only has to go back to 2007 and 2008, when housing markets collapsed during the financial crisis and the Great Recession. The value of millions of homes dropped below the amount of their mortgages. These homes were termed “underwater.” The problem contributed to hundreds of thousands of delinquent mortgages. In turn, many of these went into foreclosure.

The number of underwater mortgages has dwindled across most of the United States as prices have risen. The great majority of homes now are what is known as “equity rich.” Real estate research firm ATTOM has just released its second-quarter “2021 U.S. Home Equity & Underwater Report.” Its primary conclusion is:

… that 34.4 percent of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loans secured by those properties was no more than 50 percent of their estimated market value.

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On the other side of the coin, only 4.1% of mortgaged homes were underwater.

Three states had equity-rich homes that were more than 50% of the mortgaged properties located in them. These were Idaho (54.2%), California (53.8%) and Vermont (53.3%).

At the far end of the spectrum, the states with the lowest number of equity-rich homes were Louisiana (17.1%), Illinois (18.4%), Oklahoma (16.9%) and West Virginia (19.8%).

ATTOM also looked at the 106 metros with a population of over 500,000. The most equity-rich of these were San Jose (69.4%), San Francisco (64.9%), Los Angeles (57.9%) and Boise (57.4%).

The cities with the fewest equity-rich homes were Baton Rouge (13.5%), Columbia in South Carolina (16.2%) and Little Rock (17.5%).

Click here to see which county has the most expensive homes in America.
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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.