Sitting pretty
COLUMBIA BASIN — Lots of homeowners are in good shape this year.
A recent study by analysis firm ATTOM Data Solutions indicates that nearly half of mortgaged residential properties in the U.S. were considered equity-rich, meaning that the amount owed on them was no more than half the estimated value, the report said.
“The way you make money on your home is your equity,” explained Jessie “Weno” Dominguez, CEO of Imagine Realty Group in Othello. “And the way you look at equity is as your savings account. So if I purchased a home, let's say, four years ago, right before the craziness, for $200,000, I put 5% down, I owed $190,000. I've been paying it for five years and owe now $170,000. I kept the house up, maintained it, kept it pretty nice. As home values rise, the prices continue to go up. That same home is now worth, let's say, $425,000, and I owe $170,000. So I'm equity-rich.”
The study indicated that in the third quarter of 2022, 48.5% of mortgaged homes were classed as equity-rich, compared to 48.1% in second quarter and 39.5% in the third quarter of 2021. In fact, the the third quarter of 2022 marked the 10th consecutive quarter in which the proportion of equity-rich homes increased, according to the ATTOM report.
The Spokane-Spokane Valley Metropolitan Statistical Area ranked ninth in the country for equity-rich properties, at 64.7%, according to the report. The Seattle-Tacoma area came in at 21st, with 61.7%. Grant County came in at 565.5%. Figures were not available for Adams County.
The strong equity doesn’t make it a good idea to sell right now, Dominguez said, because recent interest rate increases have turned the market quickly from favoring the seller to favoring the buyer. But that’s not to say that the added equity isn’t useful, Dominguez said.
“It's there, right? If you need to, you can do a cash-out (refinance),” he said. “So let's say that that same owner wanted to borrow 100 grand for renovations. They can do a home equity line of credit against their equity in their home. Let's say I want to undertake some some renovations. Obviously I'm out to pay a little higher (interest) rate, but I still can access usually 80% of the equity.”
The additional equity is also a hedge against inflation, Dominguez added. Money in the bank loses value, he explained, but money invested in a home tends to grow along with other prices. So an equity-rich home buyer who wants to upgrade needs to borrow less money, which offsets some of the cost added by higher interest rates.
At the same time, according to the ATTOM data, the number of properties that were seriously underwater – meaning that the amount owed was at least 25% more than the value of the property – has dropped significantly nationwide, 2.9% of homes compared to 3.4% at the same time in 2021. Washington state had the third-lowest rate of seriously underwater properties, with 1.2%.
In Grant County, only 1.6% of homes were seriously underwater, according to ATTOM figures.
“The Basin always holds very strong,” Dominguez said. And even if you look through ’08, ’09, we stayed very steady.”
Joel Martin can be reached via email at jmartin@columbiabasinherald.com.
At a glance:
Moses Lake: 56.5% equity-rich, 1.2% seriously underwater
Wenatchee: 62.6 equity-rich, 1.6% seriously underwater
Benton County: 55.9% equity-rich, 1.1% seriously underwater
Spokane-Spokane Valley MSA: 64.7% equity-rich, 1.3% seriously underwater
Seattle-Tacoma-Bellevue MSA: 61.7% equity-rich, 1.0% seriously underwater
PULL QUOTE (can use Home equity 2.jpg for mug with quote): “The way you make money on your home is your equity. And the way you look at equity is as your savings account.” — Jessie “Weno” Dominguez, Imagine Realty Group
