U.S. Home Values Drop $2.3 Trillion But Some Markets Still Rising

Home values have been coming down since they peaked in June of last year. A Redfin report shows the U.S. total went as high as $47.7 trillion before it dropped to $45.3 trillion in December. That’s a 4.9% decline and the largest June-to-December percentage drop since 2008. The report also shows that home values in some markets are holding up well, with double-digit year-over-year gains.   Hi, I'm Kathy Fettke and this is Real Estate News for Investors. Please don’t forget to subscribe to our podcast, and leave us a five-star review if you like what you hear!   According to Redfin, December year-over-year home values were still 6.5% higher nationally, but that’s the smallest year-over-year increase since August of 2020. The analysis included data on 99 million U.S. residential properties in the top 100 metros for population. (1)   Fight Against Inflation Impacting Home Values   Property values started declining after what seemed like an unstoppable run-up in home values. Inflation really took off after all the government stimulus during the pandemic, and now the Fed is trying to slow things down with rate hikes. Although the higher short-term rates are not directly connected to mortgage rates, they do have an impact. And when mortgage rates rise, home prices fall.   The median U.S. home price hit a peak of $433,133 in May, and then dropped 11.5% to $383,249 in January. While that was happening, the average 30-year fixed-rate mortgage hit 7.08% last November and has come down closer to the 6% level since then, but it’s still more than two times what it was for years before that.   On the bright side, people who bought homes before or during the pandemic are still seeing gains. Redfin’s Chen Zhao says: “The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirusvwas declared a pandemic.”   Florida Home Value Holding Up Well   But one of the more interesting results of this analysis – it shows that home values in Florida and other Southeast metros are not only holding up well, but rising in many areas.   Redfin says the total value of homes in Miami were up 19.7% year-over-year in December. That’s a huge annual increase.   North Port-Sarasota was second on the list of rising Florida home values with a 17.8% year-over-year increase. Knoxville, Tennessee, was next with a 17.7% increase. Charleston, South Carolina, follows with a 17.4% increase. And then we’re back to Florida, where Lakeland was up 16.9%. When you look at the top ten metros for home value appreciation, six of them were in Florida, including Fort Lauderdale, Orlando, Jacksonville, and Tampa.    Palm Beach Redfin agent, Elena Fleck, says: “Florida’s housing market is being sustained by folks moving in from the North and as of recently, the West Coast.” She says that “people are pouring in from New Jersey and New York” thanks to Florida’s affordability and the fact that Florida has no income tax.   Suburbs Are Doing Better than the Cities   The report also shows that home values are doing better in the suburbs than they are in the cities. That’s the result of the remote worker exodus that continues although many companies are demanding that employees spend at least some time in the office.   The housing market that lost the highest percentage value in this recent decline is the San Francisco Bay Area. You might also expect to see declines In markets where there’s a high risk of flooding or heat, but they’ve done better than other areas. Redfin says that suggests that climate dangers are not yet priced into home values.   You’ll find a link to the Redfin report in the show notes for this episode at newsforinvestors.com. You can also join RealWealth at our website. It’s free and easy to join for access to all our data on strong rental property markets. If you’d like to see some of these properties in person, please check out our tour page. We have several tours lined up over the next few months.   As always, I ask everyone to please subscribe to our podcast, and follow me on instagram @kathyfettke.    Thanks for listening! I’m Kathy Fettke.   Links:   1 - https://www.redfin.com/news/housing-market-loses-value-2023/