The 5 US Cities Where Homeowners Are Losing Equity

What crosses your mind when you buy a house? There are all kinds of things to consider, such as the neighborhood, access to jobs, and safety in the area. There’s a good chance plenty of people don’t think about how easy it will be to sell their homes when it comes time to leave or if their houses lose value while paying off the mortgage.

What is losing equity on a house? This is when you have a mortgage that’s higher than the current value of the property. It happens when someone takes out a mortgage when the market is high, with drops in value, meaning you’re paying more than necessary with no way out. Now, the five US cities where homeowners are losing equity have plenty worried about getting their money back on their homes.

5. Los Angeles, California, was once the place to be, but that’s all changed 

• Equity lost from April - July 2022: 10%

For years, the City of Angels has been the place to be if you want to make it in the entertainment industry. Having access to a host of start-ups and business opportunities has also attracted people in their millions over the years, but the halo is starting to dim around the city. In fact, people are now leaving Los Angeles at an incredible rate, with the rising cost of living and inflated house prices to keep up with demand seemingly being pushed too far. All in all, homeowners have been losing equity by around 10% since April 2022.

4. San Francisco, California, has seen one of the largest drops in equity for homeowners 

• Equity lost from April - July 2022: 14%

San Francisco is a popular place to be, thanks to the tech industries that have called the California city home throughout the decades. The number of jobs on offer might be one thing, but the cost of houses in the area has long been criticized for being way above the rest of the nation. Black Knight claims that 80% of people buying houses in San Francisco in the first half of 2022 were purchasing their first homes. The problem? The equity of those houses has already fallen 14% from April to July 2022.

3. San Diego, California, has seen a dramatic decrease in house sales 

• Equity lost from April - July 2022: 14%

It seems to be a buyers market to a certain extent in San Diego, California. Why? The city has seen home sales drop 43% in July 2022 compared to the same time last year. This means homeowners across the city are getting a little desperate and slashing house prices in a bid to up and leave. Sadly, one of the biggest reasons homes are failing to sell is because people no longer want to call San Diego home. Instead, homeowners are losing equity at around 14% this year as people want out. 

2. Seattle, Washington, has seen 67% of people consider leaving in recent months 

• Equity lost from April - July 2022: 18%

Amazingly, Seattle is the only city outside of California where homeowners are losing equity. Sadly, things get even worse when you find out things are down 18% from April to July 2022. According to a Seattle Metropolitan Chamber of Commerce survey, 67% of people have considered moving out of the city. 35% blamed the cost of living, while other high percentages were due to public crime and homelessness across the city. All in all, it’s seen people looking to leave with no buyers to take their place.

1. San Jose, California, has seen the biggest loss in equity for homeowners 

• Equity lost from April - July 2022: 20%

When it comes to the cities where homeowners are losing equity, no one comes close to those living in San Jose, California. This has seen the most significant drop in figures throughout 2022, with house prices falling 10% in the last three months. Tumbling equity values on their homes, teamed with the incredibly high cost of living that comes with San Jose, means homeowners could be stuck with their properties for a long time. That is unless they slash the prices even further and accept they’ll be taking a huge loss on the sale.

It seems living in California has gone from being the American Dream to the American Nightmare. After all, long gone are the days of the flashing lights of Hollywood and tech start-ups, as they’ve been replaced with homeowners losing equity left, right, and center.