SAN GABRIEL VALLEY — Slower Home Equity Growth could eventually affect spending beyond California’s housing market. Contractors, retailers and other local businesses may feel the effects if homeowners become more cautious about borrowing or making major purchases.
California still has substantial homeowner equity. During the second quarter, 45.6% of mortgaged homes were equity rich, according to ATTOM. That means outstanding secured loans totaled no more than half the property’s estimated market value.
The figure fell sharply from 56.9% a year earlier and 52.9% during the previous quarter.
Slower Home Equity Growth Affects Wealth
Home equity represents a property’s value minus debt secured by the home. Owners can potentially access that wealth by selling or borrowing against their property.
That makes housing an important part of household finances. Federal Reserve data valued owner-occupied real estate nationally at $48.7 trillion during the first quarter of 2026.
For longtime homeowners in El Monte, South El Monte, Baldwin Park, Rosemead and Irwindale, years of appreciation may have created substantial household wealth.
Research has also linked changes in housing wealth with consumer spending. Federal Reserve research found that housing wealth and consumption generally move in the same direction, although other economic factors can influence both.
That relationship can reach local businesses.
Homeowners who borrow against their properties may use proceeds for renovations, debt repayment or other expenses. Federal Reserve research has examined home equity extraction used for consumer spending, home improvements and other purposes.
Higher Borrowing Costs Add Restraint
Slower Home Equity Growth does not mean California homeowners have suddenly lost their financial cushion. Nearly half of mortgaged properties statewide still meet ATTOM’s equity-rich definition.
Yet homeowners may respond differently when property appreciation slows. Accessing equity also requires careful consideration because home equity loans and credit lines create debt secured by the property.
For local contractors and retailers, changes in homeowner behavior could matter. A family may proceed with an essential roof replacement while postponing a discretionary kitchen remodel. Similar decisions can affect appliance stores, flooring companies, landscapers and other businesses.
Federal Reserve research published in 2025 found that consumer spending has become less sensitive to fluctuations in wealth than in previous decades. That finding suggests any local effect from slowing housing wealth may be gradual rather than immediate.
Residents can review California equity data through ATTOM’s state equity report and national household balance-sheet information through the Federal Reserve.
California homeowners remain in a relatively strong equity position despite the recent decline. For the San Gabriel Valley, the next question is how homeowners use that wealth as the housing market cools. Their decisions could influence spending well beyond real estate transactions.
