George Ready puts his South Carolina home on the market in July 2022, following a 6% increase in mortgage rates. He needed to sell for personal reasons. He was also concerned that by listing after mortgage rates rose, he missed out on the huge prices that hit the peak of the post-pandemic housing boom just months earlier.
“Originally, I thought we’d run into problems, I thought we’d sell for $350,000…but, we’d been on the market less than a week, and we had an offer,” Ready told Luck,
Ready ended up getting her list price of $465,000 for her two-story Craftsman-style home in Taylor, SC, which is more than 95% more than the $238,500 she paid for a four-bedroom home in 2015.
Even as the ongoing housing downturn has brought national home prices down slightly from peaks during the pandemic housing boom, most homeowners are still living big-time. In fact, of the 46 states tracked by CoreLogic, 42 saw average home equity levels increase between the fourth quarter of 2021 and the fourth quarter of 2022. Only California, Idaho, Utah and Washington saw declines in average equity levels between that year-over-year period.
“As US home price growth continues its slow, steady decline into the final months of 2022, home equity trends naturally followed suit. In the fourth quarter of 2022, the average borrower earned nearly $14,300 in equity year-over-year, compared with the $63,100 gain seen in the first quarter of 2022, Selma Hepp, chief economist at CoreLogic, wrote in a statement. Luck,
The average homeowner in Florida saw the biggest gains, 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 decline, with average equity falling $21,352 during that period.
Through February, two-thirds of regional housing markets tracked by Zillow saw local home prices decline from their 2022 peak. However, only 39 of the country’s 400 largest core markets saw local home prices decline by more than 5% on a seasonally adjusted basis. Almost all hard-hit markets are out west. (Here’s home price data for the nation’s 400 largest housing markets).
Heap writes, “While equity gains have been offset by declining home prices in some areas, at the end of 2022, U.S. homeowners still have more than about $270,000 in equity.” “Even in Idaho, where borrowers were most susceptible to losses, the typical homeowner with a mortgage still has $250,000 in home equity remaining.”
Let’s be clear: These year-over-year equity gains don’t mean the U.S. housing market has gone back into boom-mode.
In fact, nearly all of these equity gains occurred during the first few months of 2022 (see chart below), when the pandemic housing boom—which pushed up national home prices by 41% between March 2020 and June 2022—hits its final innings. I was in
For 124 consecutive months, from the bottom of the last 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 could see that streak come to an end in late 2022. In fact, US home prices fell every month in the second half of 2022, closing the year down 2.7% from the June peak.
On a year-over-year basis, national home prices are still up 5.8%. However, it is likely that national home prices as measured by Case-Shiller will turn negative on a year-over-year basis over the next few months, as the months of higher appreciation from early 2022 fall out of the 12-month window. When this happens, Hepp says, people shouldn’t overreact.
“Some outdoor areas that became increasingly popular during the COVID-19 pandemic saw a jump in prices and a drop in affordability, but these areas are now seeing major improvements. While the market will probably see some year-over-year declines, the recent reduction in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected,” Heap. Let’s write
On a national basis, CoreLogic expects US home prices to turn negative on a year-over-year basis around April. Thereafter, CoreLogic expects national home prices to rebound around peak levels achieved in June 2022 and end 2023. (Here’s a round-up of other national home price forecasts).
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Orignal Post From: A Forked Housing Market: Average Idaho homeowner sees $21K drop in equity, while typical Florida homeowner gains $49K in 2022
