As the number of equity-rich properties falls from its peak, the volume of seriously underwater properties saw its smallest annual decline, according to Attom Data Solutions.
In the first quarter, more than 5.2 million properties were seriously underwater. This is down by 291,000 properties from a year ago, marking the smallest drop since the first quarter of 2013, the earliest this data is available.
The properties seriously underwater made up 9.5% of all properties with a mortgage, down slightly from 9.7% from a year ago but still up from 9.3% in the prior quarter.
"We've reached a tipping point in this housing boom where enough homeowners have regained both sufficient equity and sufficient confidence to tap into their home equity — resulting in a noticeably slower decline in seriously underwater properties and slower growth in equity-rich properties," Daren Blomquist, senior vice president at Attom, said in a press release.
"This tapping of equity could take the form of a cash-out refinance, home equity loan or simply a home sale. We saw the biggest quarterly drop in average homeownership tenure for homeowners who sold in the first quarter since 4Q 2008, evidence that more homeowners are reaching that equity-tapping tipping point more quickly and deciding to sell," he continued.
Homeownership tenure has nearly doubled since early 2000s levels, so this notable drop could signal some mobility for the housing market. This is a good sign for homebuyers as they continue suffering from limited housing inventory.
About 13,841,082 properties were equity rich in the first quarter, down from their peak hit in last year's second quarter when 14,038,372 properties were equity rich. Equity-rich properties are still up by over 122,000 from the first quarter of 2017.
At the end of this year's first quarter, more than 19.5 million properties had between 20% and 50% equity, which is an 8% decline from last year.