Southern California homeowners are increasingly tapping into their property wealth as home equity reaches record-breaking levels across the region. With home values at historic highs, property owners are finding new ways to leverage their assets for financial flexibility.
Surging Home Equity and Accessible Wealth
According to the St. Louis Fed, total U.S. home equity reached a staggering $36 trillion in the second quarter. Out of this total, accessible equityβfunds that can be drawn through loansβstood at $13 trillion nationwide. First American Data & Analytics reports that California accounts for roughly $3 trillion, or 23% of the national total. Specifically, five Southern California counties, including Los Angeles, Orange, Riverside, San Bernardino, and San Diego, hold $1.6 trillion in accessible assets, making up 12% of the entire country’s pool.
The Rise of HELOCs Amid the Lock-in Effect
Accessible equity refers to the borrowing capacity while leaving at least 20% of the home’s value untouched. As this wealth accumulates, Home Equity Lines of Credit (HELOCs) are seeing a major uptick. HELOCs offer financial flexibility for home renovations, ADU construction, and unexpected expenses, though borrowers must weigh variable interest rates and debt risks.
New HELOC originations in California hit $7.0 billion in the second quarter, marking a 27% year-over-year surge. Los Angeles County led the region with $16 billion in newly approved limits, up 26% from the previous year. Experts attribute this trend heavily to the “lock-in effect,” where 60% of California mortgage holders maintain rates below 4% and prefer opening a HELOC over refinancing at current higher rates.
