U.S. homes lost roughly $2.3 trillion in value by the end of 2022, according to a recent Redfin report. Yet, pandemic-era gains helped total U.S. home values register a 6.5% year-over-year increase in December.
The total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% from a record high of $47.7 trillion in June – the most significant June-to-December drop in percentage terms since 2008, Redfin said.
A pullback in home buying demand, driven by rising mortgage rates, is the main reason values declined.
Falling demand from buyers, hamstrung by higher borrowing costs, has also impacted home prices. The median U.S. home sale price dropped 11.5% to $383,249 in January, down from a peak of $433,133 in May and up just 1.5% from January 2022, according to Redfin.
"The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom," Redfin Economics Research lead Chen Zhao said. "The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirus was declared a pandemic."
Home values and prices are down and mortgage rates have started to drop from the 20-year high of 7.08% in November. If you are looking to take advantage of lower mortgage rates by refinancing your mortgage loan, or are ready to shop for the best rate on a loan, consider visiting an online mortgage broker like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
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Tech hubs in expensive coastal cities have suffered the biggest drop in value, according to the report. These markets have been hard hit by pandemic-era relocation trends and, more recently, by layoffs in the tech sector.
San Francisco, California, saw the biggest decline, with homes losing $37.6 billion in value, a 6.7% annual decline. Oakland, California and San Jose, California – both in the Bay Area and tech hubs – saw values drop 4.5% and 3.2%, respectively, the report said.
At the same time, home prices in these markets have also dropped significantly. San Francisco's median home sale price, for example, decreased to $1.3 million in January, a 9.4% year-over-year decline, according to Redfin.
"The good news for Bay Area buyers is that home prices are down and competition remains far lower than it was during the pandemic homebuying boom," the report said. "The good news for sellers is that the steep decline in prices has lured some buyers back," the report continued.
Homes in Miami, Florida, saw the biggest gain, with values rising $77 billion in December – a 19.7% year-over-year increase. Six of the 10 metros with the most significant annual home-value gains in percentage terms were in Florida despite the state's exposure to hurricane damage.
The decline in home prices has made buying a home more affordable for some. If you are ready to shop for a mortgage loan or are looking to refinance an existing one, you can use the Credible marketplace to compare rates and lenders and get a mortgage preapproval letter in minutes.
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Homes owned by Black families saw the biggest gain in value, with the typical Black homeowner gaining nearly $84,000 in equity, according to a separate Zillow report.
Black homeowners' home values increased 42.5% from February 2020 to January 2023, compared to 38.5% for U.S. home values overall and 37.8% for white-owned home values. Hispanic- and Asian-owned home values increased by 38.3% and 37%, respectively.
"Recent data shows that Black families who are currently homeowners are beginning to see good returns on their investment," Tai Christensen, the Chief Diversity Officer at Arrive Home, a social enterprise that provides national down payment assistance and special purpose credit programs for underserved communities, said. "This is a positive and strong step towards shrinking the racial wealth gap.
"The time is now for our community to prioritize investing in sustainable homeownership and to build equity that can be passed onto future generations," Christensen continued.
If you want to take advantage of today's mortgage rates before they increase, you could consider refinancing your mortgage to lower your monthly payment. To see if this is the right option for you, contact Credible to speak to a home loan expert and get all of your questions answered.
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