Redfin, the specialized real estate site, reported that the total value of homes in the US was $45.3 trillion at the end of 2022, down 4.9% ($2.3 trillion) from a record of $47.7 trillion in June, which which represents the largest drop from June to December in percentage terms since 2008.
While total US home values rose 6.5% from a year earlier in December, that’s the smallest year-over-year increase for any month since August 2020, Redfin’s analysis of estimates says at more than 99 million US residential properties
“The housing market has been losing value as homebuyer demand has declined, which has also caused home prices to fall from their peak,” Redfin noted in its report. “The median home sales price in the US was $383,249 in January, down 11.5% from the high of $433,133 in May and just 1.5% up from January 2022.”
According to the information, the demand from home buyers slowed down largely due to the increase in mortgage rates, a consequence of the Federal Reserve’s effort to curb inflation, which made buying a home more expensive.
“The housing market has lost some of its value, but most homeowners will still reap huge benefits from the pandemic real estate boom,” said Chen Zhao, economic research leader at Redfin. “Total home values in the US remain approximately $13 trillion higher than in February 2020, the month before the coronavirus was declared a pandemic.”
Zhao added, “Unfortunately, many people were left behind. Many Americans couldn’t afford to buy homes even when mortgage rates bottomed out in 2021, meaning they missed out on an important wealth-building opportunity.”
The report highlights that the Bay Area real estate market has taken the biggest hit. San Francisco’s total home value fell 6.7% year-over-year to $517.5 billion in December (a decrease of $37.3 billion), a larger drop in percentage terms than any other major US metropolitan area. Two other Bay Area markets came: Oakland (-4.5%) and San Jose (-3.2%). Only three other metro areas experienced year-over-year declines: New York (-1%), Seattle (-0.4%), and Boise, ID (-0.3%).
Asian neighborhoods have also seen a huge drop in home values, falling 0.7% year-over-year to $1.2 trillion in December. By comparison, Black-majority neighborhoods saw a 5.8% increase (to $1.2 billion), White-majority neighborhoods saw a 6.9% increase (to $37.4 billion), and Hispanic/Latino-majority neighborhoods saw a 7.9% increase. (at $1.9 billion).
According to Redfin, one reason Asian homeowners may be losing more value than other homeowners is that many of them live on the West Coast, which has seen a relatively large drop in home values.
Other relevant data from the report shows that home values are holding up better in the suburbs than in cities, which have seen an exodus of residents due to remote work; millennials, who are now in their prime years to buy a home, have experienced greater value gains than other generations; and that values in areas with high risk of flooding and/or heat have held up better than values in areas with low risk, indicating that climate hazards do not have a price.
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