Daily News: California Boasts Lowest Number of Homeowners in Negative Equity in the US

California Homeowners Benefit from Rising Equity and Low Underwater Mortgages

California Leads Nation in Lowest Level of “Underwater” Homeowners

California has once again proven itself to be a leader in the housing market, with the lowest level of “underwater” homeowners in the nation. According to data from CoreLogic, only 0.6% of California’s mortgages in the second quarter were larger than the value of the home backing the loan, compared to the national average of 1.8%.

Being underwater on a mortgage can be a worrisome situation for homeowners, as studies show that those in this position are more likely to default on their loans in tough financial times. However, California’s strong growth in home equity over the past year has helped to lower the number of underwater mortgages in the state.

In fact, California saw a significant increase in home equity over the past year, with the amount of home value above the typical mortgage’s outstanding balance growing by $117,000. This gain was second only to Hawaii’s $129,800 and was followed by Florida’s $100,000. Nationally, equity rose by $60,000 in a year.

Rising homeowner equity not only provides a buffer against financial hardships but also gives homeowners the flexibility to borrow against their equity for large purchases or to pay off high-interest debt. This is especially important as interest rates climb on revolving debt like credit cards.

Overall, U.S. homeowners with a mortgage gained $3.6 trillion in equity, representing about 63% of all homes. The average homeowner equity jumped 25% from the second quarter of last year and rose 6.6% from the first three months of this year. While this is a smaller increase compared to earlier in the year, it reflects a more moderate pace of home price growth as the housing market has cooled amid higher mortgage rates.

Looking ahead, CoreLogic forecasts that home prices will continue to increase by 5% over the next year, which may slow down the rate of home equity gains. However, California’s strong performance in the housing market bodes well for homeowners in the state.

With California leading the nation in the lowest level of underwater homeowners and strong growth in home equity, the state continues to be a shining example in the housing market.

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