What Every Homeowner Should Know
If you’ve been hearing more buzz about home equity lately, you’re not alone, and for good reason. With home prices in California soaring over the past few years, especially in desirable areas like San Diego County, many homeowners are sitting on a significant amount of equity without even realizing it.
So what is home equity, and why should you care? Let’s break it down in a way that’s especially relevant for homeowners in Southern California.
What Is Home Equity?
In simple terms, home equity is the difference between your home’s current market value and what you still owe on your mortgage. For example, if your property in East County San Diego is worth $1,000,000 and you owe $450,000, you’ve built $550,000 in equity.
There are two primary ways to access this equity:
- Home Equity Loan: A lump-sum loan secured by your home, typically at a fixed interest rate.
- HELOC (Home Equity Line of Credit): A revolving line of credit you can draw from over time, usually with a variable interest rate.
Equity Trends in San Diego County and California
As of early 2025, nearly half of all mortgage-holding homeowners in the U.S. are considered “equity rich,” meaning they owe less than 50% of their home’s value. In California, where home prices tend to rise faster than national averages, the equity gains have been especially pronounced, even with the recent softening in price appreciation.
In San Diego County, rising home values and limited housing inventory have contributed to a strong equity position for many local homeowners. While some western states saw minor losses in equity over the past year, the long-term trend in our region remains upward.
Why Equity Matters
Home equity is more than just a number, it’s a powerful financial tool. Here’s how homeowners in San Diego can benefit:
- Sell Smart: Equity directly impacts your net proceeds when you sell your home. The more equity you’ve built, the more cash you’ll walk away with after closing costs and loan payoffs.
- Borrow Responsibly: Tapping into your home’s equity through a HELOC or home equity loan can be a lower-cost option to fund major renovations, consolidate debt, or help with a child’s college tuition.
- Build Wealth Over Time: Unlike renting, every mortgage payment you make adds to your ownership stake. With San Diego’s long-term appreciation trends, equity can grow even faster, especially in communities like Jamul, El Cajon, and La Mesa.
What Increases Your Home Equity?
- Making extra mortgage payments: Paying down your principal faster increases your equity.
- Upgrading your property: Home improvements that boost your home’s value also grow your equity.
- Rising home prices: When the market moves up,as it often does in San Diego, so does your home’s worth.
A Note on Negative Equity
While rare in today’s market, negative equity (when your home is worth less than your mortgage balance) can still happen, especially if you bought at peak pricing or took out a high loan-to-value mortgage. In California, only about 2% of mortgaged properties fall into this category, but it’s something to be aware of if prices dip or you need to sell quickly.
Final Thoughts
Whether you're thinking about selling, refinancing, or just curious about your financial standing, knowing your home equity is crucial. In markets like San Diego County, where property values have seen substantial growth over the past five years, your home may be one of your most valuable assets.
If you’d like a personalized estimate of your home’s equity or want to explore options to access it, reach out to us at The Svelling Group. We’re local real estate experts serving Jamul and the greater East San Diego County area, and we’d love to help you make the most of your homeownership journey.
Ready to see how much equity you’ve built? Contact us today at (619) 994-6828 for a free, no-obligation home equity review.