U.S. Homeowners Lost $2.3 Trillion In Value Since Mid-2022
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Loading... - Anna Russell
- 02 Mar 2023
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According to national property broker Redfin, total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% ($2.3 trillion) from a record high of $47.7 trillion in June 2022.
That's the largest June-to-December drop in percentage terms since 2008. While the total value of U.S. homes was up 6.5% from a year earlier in December, that's the smallest year-over-year increase during any month since August 2020. This is according to Redfin's analysis of more than 99 million U.S. residential properties.
The housing market has been shedding value because homebuyer demand has waned, which has also caused home prices to fall from their peak. The median U.S. home sale price was $383,249 in January, down 11.5% from a peak of $433,133 in May, and up just 1.5% from January 2022.
Homebuyer demand slowed in large part because rising mortgage rates--a consequence of the Federal Reserve's effort to curb inflation--made purchasing a home more expensive. The average 30-year fixed mortgage rate was 6.36% in December. While that's down from the 20-year high of 7.08% in November, it's roughly double the level from the start of 2022. Rates fell at the beginning of February, giving buyers some hope, but have since crept back up to December levels.
"The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom," said Redfin Economics Research Lead Chen Zhao. "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."
Zhao continued: "Unfortunately, a lot of people were left behind. Many Americans couldn't afford to buy homes even when mortgage rates hit rock bottom in 2021, which means they missed out on a significant wealth building opportunity."
We primarily use year-over-year comparisons rather than comparisons to the peak for the metro-level and demographic breakdowns in the remainder of this report, as different metros and groups saw home values peak at different times. Read More…
