New data released on Thursday reveals that approximately one in 37 homes in the United States are now considered seriously underwater, with a significant concentration in southern states.
According to the first-quarter 2024 US Home Equity & Underwater Report from ATTOM, a real estate data firm, 2.7% of homes nationally have loan balances exceeding 25% of their market value. This marks a slight uptick from the previous quarter’s 2.6%. However, despite this increase, the current rate remains lower than pre-pandemic levels, when it was more than double.
Mortgages typically become seriously underwater when homeowners either overpay for a property or make a small downpayment that fails to cushion against potential drops in value.
While government stimulus and rising property prices provided relief for homeowners during the pandemic, recent moves to raise interest rates, aimed at curbing inflation, appear to be cooling down the housing market.
Notably, several southern states have experienced a sharper increase in the share of seriously underwater homes. In Kentucky, for instance, the share surged to 8.3% in the first quarter from 6.3% in the previous one. Similarly, West Virginia, Oklahoma, and Arkansas witnessed increases in their respective shares over the same period.
The states witnessing the largest year-over-year increases in the number of seriously underwater homes are also predominantly in the south. Kentucky leads the pack with a jump of over 20,500 homes, followed closely by Mississippi and Oklahoma.
Among metro areas with a population of at least 500,000, Baton Rouge, Louisiana, topped the list with 13.4% of homes classified as seriously underwater in the first quarter. New Orleans, Jackson (Mississippi), and Little Rock (Arkansas) followed closely behind, each with significant shares of seriously underwater mortgages.