After home prices rose to a record high in May 2022, the total value of homes across the country dropped by 4.9% from June to December 2022, according to estimates from Redfin. The Bay area experienced the most noteworthy decline in value, while the Florida housing market has continued to show signs of growing.
The value of U.S. homes was $45.3 trillion at the end of 2022, down from $47.7 trillion in June, marking the largest drop in percentage terms since 2008.
Waning homebuyer demand drove the drop off in the total value of homes from June to December, Redfin concluded.
Rising mortgage rates, which hit a 20-year high of 7.08% in November, made home buying more expensive. And while rates have slightly come down to 6.62%, economic concerns and a lack of inventory will likely keep house buying activity moderate.
San Francisco, Oakland and San Jose experienced outsized declines in prices because they were high above national averages to begin with, so home values had more room to fall, Redfin’s report said.
Year-over-year, the total value of San Francisco homes fell by $37.3 billion to $517.5 billion in December, while Oakland and San Jose saw total value drop by 4.5% and 3.2%, respectively.
Areas that are more affordable for borrowers, such as Florida, South Carolina and Tennessee, continued to see growth.
Metro areas in the sunny state of Florida saw some of the most impressive increases in home values.
The total value of homes in Miami rose 19.7%, or $77 billion, to $468.5 billion in December, marking the largest annual increase in percentage terms, Redfin’s report found. Other metro areas in Florida, such as North Port-Sarasota, Florida (+17.8%) and Lakeland, Florida (+16.9%) also saw some of the largest annual home value gains.
“Florida’s housing market is being sustained by folks moving in from the North and as of recently, the West Coast,” said Elena Fleck, real estate agent at Redfin in a written statement. “People are pouring in from New Jersey and New York, in large part because Florida has relatively affordable homes and no income tax. They can get a lot more bang for their buck here.”
Despite the housing market shedding some of its value, those lucky enough to be homeowners during the pandemic, “still reap big rewards from the pandemic housing boom,” said Chen Zhao, economics research lead at Redfin. Even with a slow-down, the median U.S. home sale price was $383,249 in January, up 1.5% from January 2022.
“Unfortunately, a lot of people were left behind. Many Americans couldn’t afford to buy homes even when mortgage rates hit rock bottom in 2021, which means they missed out on a significant wealth building opportunity,” he said.
