California Homeowners Enjoying High Levels of Equity and Low Underwater Mortgages

California Leads Nation in Lowest Level of Underwater Homeowners

California has emerged as the state with the lowest level of “underwater” homeowners in the nation, according to a recent report by CoreLogic. The data shows that only 0.6% of mortgages in California were larger than the value of the home backing the loan in the second quarter of this year, compared to the national average of 1.8%.

This positive trend can be attributed to California’s significant growth in home equity over the past year. The amount of home value above the typical mortgage’s outstanding balance increased by $117,000 in California, second only to Hawaii’s $129,800. This rise in equity not only provides a buffer for borrowers against financial hardships but also allows homeowners to leverage their equity for large purchases or debt consolidation.

Overall, U.S. homeowners with a mortgage gained $3.6 trillion in equity, representing about 63% of all homes. The average homeowner equity saw a 25% increase from the previous year and a 6.6% rise from the first quarter of this year. However, the pace of home price growth has slowed down as the housing market adjusts to higher mortgage rates.

Despite the cooling housing market, CoreLogic forecasts a 5% increase in home prices over the next year. This slowdown in price growth is expected to impact home equity gains, according to economist Molly Boesel.

As the real estate market continues to evolve, California stands out as a leader in providing financial stability for homeowners and maintaining a healthy housing market.