While depressed property values can hurt some large investors, they are potentially devastating for homeowners, whose equity - in many cases representing a life's savings - can plunge or even disappear.

A. they are potentially devastating for homeowners, whose
B. they can potentially devastate homeowners in that their
C. for homeowners they are potentially devastating, because their
D. for homeowners, it is potentially devastating in that their
E. it can potentially devastate homeowners, whose

The OA is A. I thought they can refer to homeowners as well property values. MGMAT tutors please can you explain.

From a very strict standpoint, you are probably correct. However, as the OG says, 'the pronoun here clearly refers to' property values. If you need further justification, consider the fact that property values are the subject of the preceding clause, whereas large investors are the object; turning a pronoun around to refer suddenly to an object is, at best, awkward, and, at worst, undecipherable.

Consider the following example:
While Jim was talking to Stephanie, she suddenly turned around and stared at the pictures on the back wall.
'She' MUST refer to Stephanie - she's the only woman in the sentence (barring really weird baby names) - but it's still hard to get yourself to read the sentence this way. For most native English speakers, the first reading of a sentence like this (as opposed to the first hearing of the sentence when it's spoken out loud, which, fascinatingly enough, causes few problems) tends to be 'OMG, Jim's a woman.' We are so attached to the idea of coupling pronouns with SUBJECTS that it's difficult to do anything else. That is OG's reasoning.

In any case, A is clearly the BEST of the answer choices. You didn't mention a suitable alternative answer choice, so it seems this post is of the 'well, I think A is best anyway, but I still think there's a problem with it' variety. (Please correct me if you DID have an alternative answer in mind, and need to have its wrong-ivity explained)