Home values take sharpest drop since the 2008 housing crisis
The value of the U.S. housing market plunged $2.3 trillion between June and December last year, which as a percentage of the overall sector amounts to the steepest plunge in 15 years, according to new real estate data.
Total home values fell to $45.3 trillion at the end of 2022, down 4.9% from the same period a year earlier, Redfin found. By comparison, home values dropped 5.8% from June to December during the 2008 housing market crash, according to Bloomberg.
Home values are sliding now largely because climbing mortgage rates have pushed buyers out of the market, Redfin said. Boise, Idaho, Seattle and California's Bay Area — all regions that saw blazing hot housing markets two years ago as the pandemic flared — are now experiencing the nation's sharpest declines.
These three cities saw the biggest home value declines in the second half of 2022 , according to Redfin:
- San Francisco (-6.7%)
- Oakland (-4.5%)
- San Jose (-3.2%)
Only three other metropolitan areas saw year-over-year declines:
- New York City (-1%)
- Seattle (-.4%)
- Boise, Idaho (-.3%)
Home values may have fallen nationwide last year, but they're still higher now than when the pandemic began, according to Redfin. Interest rates were at their lowest during the height of the global health crisis and that would have been an ideal time to buy.
"Unfortunately, a lot of people were left behind," Chen Zhao, senior manager of economics at Redfin. "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."
But not every city saw declines. Midsize towns in the South — mostly in Florida — saw double-digit home increases, according to Redfin. Those metro areas include:
- Miami (+19.7%)
- North Port-Sarasota, Florida (+17.8%)
- Knoxville, Tennessee (+17.7%)
- Charleston, South Carolina (+17.4%)
- Lakeland, Florida (+16.9%)
Redfin's data lands just as the nation is gearing up for the spring homebuying season. Mortgage rates have nearly doubled from a year ago, growing to 6.5% this month compared to 3.5% a year ago. The median home sale price grew to $383,249 in January, up 1.5% from a year ago, Redfin said.
Realtors said they expect 2023 to look markedly different from what buyers experienced last year when median home prices reached record highs and mortgage rates at one point reached as high as 7%.
Buyers these days have grown accustomed to the higher interest rates and sellers are starting to lower their prices, Wall Street Journal reporter Veronica Dagher told CBS News.
"Sellers are realizing that, hey, maybe my neighbor got a certain price a year ago (but) I might not get that same price," Dagher said.