Key Takeaways
- Market Correction, Not Crisis: Zillow reports 53 percent of homes lost value this year, but researchers say this is a normal cooling period after years of runaway appreciation.
- Long-Term Equity Remains Strong: Despite short-term dips, median home values have climbed 67 percent since purchase, with some metros seeing gains above 100 percent.
- Few Selling at a Loss: Only 4.1 percent of homes sold below their previous sale price in October, far lower than pre-pandemic levels, showing homeowners still have solid financial buffers.
More than half of American homes lost value over the past year, according to new research from Zillow, but despite the headlines, this isn’t the second coming of 2008. It’s what a cooling, post-pandemic housing market looks like when the sugar high of ultra-cheap money finally fades and supply starts catching up with demand.
Zillow found that roughly 53 percent of U.S. homes have dipped in value since last year, the highest share since 2012, when the country was clawing its way out of the Great Recession. Senior economic researcher Treh Manhertz said “homeowners may feel rattled,” but stressed that this is a normal correction, not a crisis. Prices soared for six straight years, far beyond fundamentals, and what we’re seeing now is gravity doing its job.
On average, homes fell 9.7 percent from their peak — higher than the 3.6 percent drawdown in spring 2022, but still miles away from the 27 percent plunge seen in early 2012. And despite the dip, only a small fraction of homes are selling below their last purchase price. In October, that number was 4.1 percent, up from 2.4 percent a year ago, but well below the 11.2 percent pre-pandemic level.
What matters most: equity. Americans who bought their homes eight and a half years ago have seen median values rise 67 percent. In supply-starved metros, appreciation has been even more dramatic. Buffalo saw a staggering 108 percent gain. San Jose clocked in at 97 percent, Providence at 95 percent, Columbus at 90 percent, and San Diego at 88 percent.
That kind of long-run growth doesn’t point to collapse. It signals stabilization… and in many areas, stubbornly strong demand fueled by Americans who stay in their homes longer and continue to build wealth the old-fashioned way.