(The Center Square) – A new report painted a gloomy picture for many Kentucky homeowners.
ATTOM, a company that collects data on more than 155 million properties nationwide, found the Bluegrass State had the steepest quarter-to-quarter decline of “equity-rich” mortgages in its quarterly U.S. Home Equity & Underwater Report. Making matters worse, the state also experienced the biggest increase in mortgages considered “seriously underwater.”
The firm defines an equity-rich mortgage as one where its estimated balance isn’t more than half of the estimated market value of the residential property tied to the loan. In the first quarter of 2024, only 28.7% of such mortgages in Kentucky met the criteria. That’s down from 35.4% at the end of last year. Although 25 other states reported quarterly declines, none of them dropped by more than three percentage points.
Meanwhile, the number of properties considered seriously underwater, which ATTOM defines as a mortgage with a loan balance at least 25% higher than the property’s perceived value, went from 6.3% in the fourth quarter of last year to 8.3% this past quarter.
Only Louisiana, at 11.3%, and Wyoming, at 8.8%, had higher underwater rates than Kentucky. The state also ranked among the bottom 10 nationally for the percentage of equity-rich mortgages.
Across the country, the seriously underwater rate is 2.63%, a slight decrease from the 2.7% rate in the previous report. Nearly 75% of the states reported an uptick, but it was only a marginal increase for most of them.
The percentage of equity-rich residential properties is 45.8% nationally. According to the firm, this is the third consecutive quarterly decline and the lowest the rate has been in two years. However, ATTOM CEO Rob Barber said there are still some bright spots for many homeowners.
“Homeowner balance sheets continue to benefit in a huge way from the boom times in the form of elevated equity that can be used to help finance all kinds of things, from home renovations to business startups. Still, the windfalls are starting to erode bit by bit amid mounting signs that the market is no longer so super-heated,” he said. “It’s too early to make any broad statements about the market direction, especially coming off the typically slower Fall and Winter months. But amid the recent trends, this year’s Spring buying season will be of heightened importance in telling us if there is a new long-term market pattern developing.”
The report’s bad news covered all parts of the state. Jefferson County had the fourth-lowest equity-rich rate nationally among counties with more than 500,000 residents. Only Baltimore City and County (25.4%); Prince George’s County, Maryland. (26.2%); and Cook County, Illinois. (26.5%); ranked lower than the 26.7% mark in Kentucky’s most populous county.
Kentucky was also home to two of the top five ZIP Codes with the most seriously underwater mortgages. The 42728 ZIP Code in Columbia, a small town 65 miles east of Bowling Green, was fourth nationally at 49.3%. Right behind that was the 42445 ZIP Code in Princeton, 40 miles east of Paducah, where 42.2% of properties met that definition.
