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“Originally I thought we were going to run into trouble, I thought we were going to sell for $350,000… But we were on the market for less than a week and had an offer,” Reedy says Assets.
Reedy ended up fetching his list price of $465,000 for his two-story Craftsman-style home in Taylors, S.C. That’s 95% higher than the $238,500 he paid for the four-bedroom home in 2015.
Although the ongoing housing downturn sees national home prices fall slightly from the peaks hit during the pandemic housing boom, most homeowners are still up big time. In fact, among the 46 states tracked by CoreLogic, 42 states saw average equity levels increase between the fourth quarter of 2021 and the fourth quarter of 2022. Only California, Idaho, Utah and Washington saw average equity levels fall between the year-over-year period.
“As U.S. home price growth continued its slow, steady decline in the final months of 2022, home equity trends naturally followed suit. In the fourth quarter of 2022, the average borrower earned about $14,300 in equity year-over-year, compared to a $63,100 gain seen in the first quarter of 2022,” Selma Hepp, chief economist at CoreLogic, wrote in a statement to Assets.
The average homeowner in Florida saw the biggest gain, with average equity increasing $49,032 between the fourth quarter of 2021 and the fourth quarter of 2022. Meanwhile, the average homeowner in Idaho saw the biggest decrease, with average equity falling $21,352 during that period.
Through February, two-thirds of the regional housing markets tracked by Zillow have seen local home prices fall from their peaks in 2022. But only 39 of the nation’s 400 largest major markets have seen local home prices fall by more than 5% on a seasonally adjusted basis. Almost all of these hard-hit markets are out west. (Here is housing price data for the country’s 400 largest housing markets).
“While equity gains declined in late 2022 due to home price declines in some regions, U.S. homeowners, on average, still have about $270,000 more in equity than they did at the start of the pandemic,” Hepp writes. “Even in Idaho, where borrowers were the most vulnerable to losses, the typical homeowner with a mortgage still has about $250,000 in remaining equity.”
See this interactive chart on Fortune.com
Let’s be clear: These year-over-year stock gains don’t mean the U.S. housing market has gone back into boom mode.
In fact, almost all of these stock gains occurred during the first few months of 2022 (see chart below), as the pandemic housing boom—which pushed up national home prices by 41% between March 2020 and June 2022—was in its final stages.
For 124 consecutive months, from the bottom of the previous correction in February 2012 to the peak of the pandemic housing boom in June 2022, the seasonally adjusted Case-Shiller National Home Price Index reported positive home price growth. But the onset of the ongoing housing downturn saw that streak end in the latter half of 2022. In fact, US home prices fell every single month in the second half of 2022, closing the year 2.7% below the June peak.
On an annual basis, national house prices are still up 5.8%. However, it is likely that national home prices, as measured by Case-Shiller, will be negative on a year-over-year basis sometime in the next few months as the high appreciation months starting in early 2022 fall out of the 12-month window . When that happens, Hepp says, people shouldn’t overreact.
“Some suburban regions that became increasingly popular during the COVID-19 pandemic saw prices jump and affordability eroded at the time, but these areas are now experiencing major corrections. And while price deceleration is likely to continue into spring 2023, while the market is likely to see some year-over-year declines, the recent drop in mortgage rates has stimulated buyer demand and may result in a more upbeat home buying season than many expected,” Hepp writes.
On a national basis, CoreLogic expects US housing prices to be negative on an annual basis around April. After that, CoreLogic expects national home prices to rise and end 2023 back around peak levels reached in June 2022. (Here’s a summary of other national home price forecasts).
Do you want to stay updated on the housing market? Follow me on Twitter at @NewsLambert.
This story originally appeared on Fortune.com
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