Heated Prices Create $1 Trillion in Equity

If you could roll all of California’s residential real estate into a single property, the owner would become an instant trillionaire, according to a new report.

The California Building Industry Association study shows that the state’s superheated real estate market has created more than $1 trillion in new equity in just the last five years. The association released the report this month at PCBC, an annual homebuilding convention in San Francisco.

Alan Nevin, the association’s chief economist, says $379 billion of the $1 trillion total was accumulated on the 2.5 million homes and condominiums sold since 2000. The remainder, $641 billion, was the equity increase on 4.3 million homes and condos owned but not sold in that time period.

Property owners in Los Angeles and the San Francisco Bay Area boasted the highest appreciation—$287 billion in Los Angeles and $234.5 billion in the Bay Area. The report highlighted appreciation of $130.8 billion in Orange County; $119.4 billion in San Diego; $113.5 billion in San Bernardino and Riverside counties; $88.8 billion in the Central Coast area; $70.8 billion in Sacramento; and $58.5 billion in the Central Valley.

Nevin says homeowners have pulled out some of their equity to purchase goods and services—a move he says has kept California’s economy rolling along.

—By Corrie M. Anders for REALTOR® Magazine Online