California homeowners lead the U.S. in being home equity rich | The Sacramento Bee
Boosted by soaring home prices, California homeowners are now sitting on the richest vein of home equity in the nation, hundreds of thousands of dollars per home in most cases, an analysis shows.
More than 43 percent of Golden State homeowners with mortgages qualify as “equity rich,” meaning those owners’ homes are now worth at least twice their mortgage balance. And fewer than 4 percent are now deeply underwater on their mortgages, far lower than the national 10 percent average.
The message is twofold: California real estate has pulled well beyond the carnage of the 2007 to 2011 housing collapse. And it has done it in a big way compared to the rest of the United States, to the point of being slightly worrisome, some real estate watchers say.
“That’s is great news for homeowners who are becoming equity rich, but it is a sign of that excess we tend to see in the California market,” said Daren Blomquist, a vice president with Attom Data Solutions, an Irvine-based real estate data company that compiled the mortgage data.
Attom defines equity rich as those whose home is worth twice what they owe on their mortgage. A homeowner with a $200,000 mortgage is equity rich if the home value is $400,000 or more. Conversely, a homeowner is considered seriously underwater if his or her mortgage is 25 percent higher than the home value, such as a home that is worth $100,000, but carries a $125,000 mortgage.
In the Sacramento region, 34 percent of homeowners have hit the “equity rich” mark, not as many as in the state’s booming coastal economies, but easily above national averages. The region’s seriously underwater number is slightly more than 4 percent.
Attom collects the mortgage data from most homes to track the ripple effect of the mass housing recession that hit the nation a decade ago. The company does not collect data from ZIP codes with fewer than 2,500 homes with mortgages. It also does not include homes without a mortgage.
The data show the nation as a whole is recovering from the housing collapse, but the results are uneven.
“The share of seriously underwater properties has dropped well below 10 percent in bellwether housing markets such as California, Washington, Texas, Colorado and New York, but the underwater rate remains stubbornly high in markets where price appreciation has not been as strong during the housing recovery of the last six years,” Blomquist said.
Mid-sized “rust belt” cities that lack jobs or growing populations have the highest underwater numbers, he said.
In some areas of California, the “equity rich” numbers dwarf the national average of 24 percent. Most of the wealthiest are in the Bay Area, including 72 percent in San Jose, the heart of Silicon Valley, and 61 percent in San Francisco.
The best-off homeowners in the Sacramento region are in the city of Davis, where 57 percent are equity rich, followed by South Lake Tahoe, at 42 percent, according to Attom data.