California Homeowners Lead the Nation in Equity Growth, Boosting Household Wealth

Record Household Wealth in the U.S.

U.S. households have reached an unprecedented level of wealth, surpassing $160 trillion in the first quarter of 2024. This staggering figure represents a wealth value 17 times greater than the combined market capitalization of the top three largest companies: Microsoft, Apple, and Nvidia.

The rally in tech stocks has been a significant contributor to the growth of household wealth. Another major factor has been the substantial increase in home equity. Homeowners across the country have collectively experienced a $1.5 trillion increase in equity since last year, with the average homeowner equity now standing at around $305,000.

This equity growth has been widespread, with all states experiencing annual equity gains in homes. California led the nation with an average equity gain of $64,000 per homeowner.

Nationally, home values have tripled (up 315%) since 1991, outpacing the cumulative rate of inflation during the same period, which stands at 130%.

Real Estate Remains Local

While household wealth has reached record levels, certain areas across the country are experiencing significant price cuts in the residential real estate market. States such as Tennessee, Florida, and Texas are among those witnessing substantial price reductions.

Notably, these states have also experienced large year-over-year increases in housing inventory, potentially indicating a shift towards a buyer's market in these regions.

Property Tax Considerations

In a recent newsletter, the importance of understanding fixed and variable costs was covered. One variable cost is property taxes; reviewing property tax assessments periodically is a good habit to adopt. It is advisable to verify the details provided by tax appraisers, including the measured size of both the structure and the land, and ensure agreement with their description of the property.

Additionally, it is recommended to compare the assessments of neighboring properties, as this information is publicly available.

California Insurance Market

The California Insurance Commissioner is working on a "sustainable insurance strategy" aimed at attracting more insurance companies to the state to write homeowner and commercial policies. Major insurers, such as Allstate, are awaiting the details of this strategy before deciding on resuming the issuance of new home insurance policies in California. Expect further updates on this in the coming months.