Due to increasing mortgage interest rates that have reduced purchasing power and caused a decline in property prices, homeowners in Southern California and around the nation are seeing a massive decline in equity for the first time in a decade.
According to real estate specialists, the equity loss, which is predicted to get worse, might slow economic development since fewer individuals would have money to invest in businesses, make home improvements, or cover unexpected expenses.
Some recent purchasers expressed concern about the market change to The Times, saying they are worried that declining prices may lock them in their mortgages and have personal repercussions like tight budgets and postponed retirement.
While a decline in property values might encourage first-time buyers to enter the market, it can also restrict current homeowners to sell or refinance, borrowers must pay off their previous mortgage, which most of them cannot do if their equity goes into the negative.
Even while it is increasing, the number of people who have little to no equity currently is negligible in comparison to what it was in the wake of the Great Recession.
Those who made purchases this year are most in danger.
(Source Credit: This Article was originally published by Los Angeles Times on Dec 10th , 2022.)