US Housing Market Plunges: 53% of Homes Lose Value in Record Decline

The US housing market has experienced a significant downturn in the past year, with over half of homes losing value, according to Zillow. This marks the highest share of homes to decline in value since the aftermath of the Great Recession. In October, a record 53% of homes saw their Zestimates decline, the most since 2012 and a substantial increase from just 16% a year earlier. The widespread decline in home values was most pronounced in the West and South regions, where nearly all homes experienced losses. Denver topped the list with 91% of homes declining in value, followed by Austin (89%), Sacramento (88%), Phoenix (87%), and Dallas (87%). In contrast, the Northeast and Midwest regions have largely avoided such losses, but declines are spreading to more homes in all metros. The average drawdown in home values has also increased significantly, hitting 9.7% in the past year. While this is still below the 27% average drawdown in early 2012, it represents a substantial increase from 3.5% in the spring of 2022. Notably, most homes have also dropped from their peak valuations, with the median value up just 67% since the last sale. It is essential to note that lower home values are merely losses on paper and do not necessarily translate to realized losses for homeowners. Unless actual sale prices undercut their initial purchase prices, homeowners are still ahead, with Zillow data showing that values are up a median 67% since the last sale, and only 4.1% of homes have lost value since then. The implications of this trend are significant for the US housing market and the broader economy. A decline in home values can lead to reduced consumer spending, as homeowners may feel less confident in their financial situation. Additionally, a decrease in home values can also impact the overall economy, as reduced housing market activity can lead to decreased economic growth. Zillow's data highlights the need for policymakers to closely monitor the housing market and take proactive measures to mitigate the effects of a downturn. The company's analysis suggests that the widespread decline in home values is a result of a combination of factors, including rising interest rates, increased inventory, and decreased demand. As the housing market continues to evolve, it is essential to stay informed about the latest developments and trends. Zillow's data provides valuable insights into the current state of the market and can help homeowners, policymakers, and industry professionals make informed decisions. In conclusion, the US housing market has experienced a significant downturn in the past year, with over half of homes losing value. While the decline in home values is a concern, it is essential to note that lower home values are merely losses on paper and do not necessarily translate to realized losses for homeowners. As the housing market continues to evolve, it is crucial to stay informed about the latest developments and trends to make informed decisions.