The average US homeowner lost approximately $4,200 in equity during the past year; however, this still leaves the average borrower with about $302,000 in accumulated home equity, according to a new report for the first quarter of 2025 from Cotality.
Particularly, California has fared better than the national average, with the average equity per borrower declining modestly year-over-year by approximately $2,700.
“This trend is primarily driven by newer borrowers who are early in their mortgage terms and have not yet significantly benefited from home price appreciation, Thomas Malone, principal economist at CoreLogic, told GlobeSt.com.
“We expect equity gains in the state to remain limited over the coming year, as home price growth is projected to be marginal."
However, the high average equity held by California homeowners may result in longer stays on the market.
“With a substantial equity cushion, many borrowers are not under pressure to sell and can afford to wait for an exceptional offer,” Malone said.
In the US, the number of underwater homes increased by 17% year-over-year to 2.1%, lower than the 3.6% pre-pandemic total.
Total homeowner equity for borrowers with a mortgage totaled $17.3 trillion in the first quarter.
The single-family home market indicates that if prices rose 5%, then 150,000 properties would regain their equity; however, if prices fell 5%, 251,000 properties would turn to negative territory.
For nearly a year, negative equity has been rising quarterly, Cotality reported. Compared to the first quarter of 2024, 172,000 more homes (or 17%) fell into this category nationally.
But since the pandemic, US homeowners have enjoyed strong home price appreciation, with annual gains averaging over $38,000 between 2020 and the end of 2022.
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