For 124 consecutive months, including the bottom of the housing crash in February 2012 to the top of the Pandemic Housing Boom in June 2022, US home prices have shown positive growth every month. That record, of course, fell late last year as the Fed’s inflation war led to a correction in home prices.
On the one hand, since their peak, national home prices have declined only a few percentage points through November, according to the seasonally adjusted Case-Shiller National Home Price Index. On the other hand, the ongoing home correction has begun to have a financial, and psychological impact on homeowners.
On Wednesday, Redfin released a report finding that total US home values have fallen by $2.3 trillion since the start of the home price correction.
“Total U.S. home prices were $45.3 trillion at the end of 2022, down 4.9% ($2.3 trillion) from a record high of $47.7 trillion in June. This was the largest June-to-December percentage decline since 2008,” Redfin researchers wrote.
Let’s be clear: While there has certainly been a home price correction taking place in many markets across the country, most homeowners are still very much out of pocket since the start of the pandemic.
“The housing market has shed some value, but most homeowners will still reap the big rewards of the Housing Boom Pandemic,” Redfin researchers said in the report. “Total U.S. home prices remain roughly $13 trillion higher than they were in February 2020, the month before the coronavirus was declared a pandemic.”
Is this house price correction almost over? It depends on who is asking.
Between 29 major real estate fortune tellerssix companies think national home prices will either rise or remain flat in 2023. Meanwhile, 23 major real estate forecasters think national home prices will fall more this year.
Fed officials have acknowledged that they are paying attention to the correction.
On Wednesday, the minutes released from the recent FOMC meeting showed that Federal Reserve officials believe “valuations in the residential and commercial property market remain high” and “that the potential for large declines in property prices remains greater than usual.”
When a group like Redfin says “US home prices,” it means the national aggregate. At the regional level, this house price correction (or lack thereof) continues to vary.
Among the nation’s 400 largest housing markets tracked by Zillow, 276 have seen local home prices decline from their seasonally adjusted 2022 peak. Another 124 markets remain at peak 2022 prices.
Markets with the biggest declines include places like Bend, Ore. (down 9.2%) and Phoenix (down 6.3%), absent from the Pacific coast and Southwest.
Going forward, Goldman Sachs expects this West-East divide to continue.
“On a regional basis, we project larger declines in the Pacific Coast and Southwest regions—which have seen the largest increases in average inventory—and more modest declines in the Mid-Atlantic and Midwest—which have maintained greater affordability throughout a couple of years ago,” Goldman Sachs wrote in a new report.
Want to stay updated on home improvement? Follow me on Twitter @NewsLambert.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter that examines what leaders need to succeed. Log in here.