California Homeowners Lose $59,600 in Equity Amid Housing Market Stumble

California homeowners with mortgages have seen a significant loss in equity over the past year, with an average decrease of $59,600 according to CoreLogic. This decline in home values is not limited to California, as 13 other states and the District of Columbia also experienced a drop in equity.

The western region of the United States, which was once a hot market during the pandemic buying frenzy, saw some of the largest declines in equity. Washington state had the largest decrease at $74,300, followed by California, Utah, Nevada, and Idaho. California’s equity dropped by 9.7%, second only to Washington’s 15% decline.

Despite these losses, the typical homeowner with a mortgage still has a significant amount of equity in their home. In California, the gap between a home’s value and its mortgage is $558,000, the second-highest in the nation behind Hawaii. Nationally, homeowners have an average of $274,000 in equity.

While the decrease in equity may raise concerns about financial challenges for homeowners, CoreLogic’s chief economist Selma Hepp notes that the recent drops in California values have been relatively modest. In San Francisco, for example, even with an equity loss of $174,000, the average homeowner still has home values $1 million above the outstanding mortgage.

Overall, despite the decline in equity, California homeowners should not expect deep discounts in the housing market due to panic selling. Hepp suggests that recent price gains indicate homeowners are regaining some of the lost equity.

The housing market in California and across the nation continues to face challenges, but homeowners with mortgages still have a significant financial cushion in their home values.