A split housing market: The average homeowner in Idaho sees home equity fall by $21,000, while the typical Florida homeowner gains $49,000 by 2022

Just after mortgage rates rose to 6%, George Reedy put his South Carolina home on the market in July 2022. He had to sell for personal reasons. He also feared that by listing after mortgage rates rose, he would miss out on the frothy prices that had hit the peak of the pandemic housing boom just months earlier.

“Originally I thought we were going to be in trouble, I thought we were going to sell for $350,000… But we were on the market for less than a week and had an offer,” says Reedy. Fortune.

Reedy eventually hit his $465,000 list price for his two-story craftsman-style home in Taylors, S.C. That’s 95% higher than the $238,500 he paid for the four-bedroom home in 2015.

Even as the ongoing housing crisis pushes national home prices down a bit from the peaks seen in the housing market during the pandemic, most homeowners are still up. In fact, of the 46 states tracked by CoreLogic, 42 states saw average levels of equity increase between Q4 2021 and Q4 2022. Only California, Idaho, Utah, and Washington saw average levels of equity assets fall between that year. long term period.

“As US home price growth continued its slow, steady decline into the final months of 2022, home price trends naturally followed suit. In the fourth quarter of 2022, the average borrower earned approximately $14,300 in annualized equity, compared to earnings of $63,100 in the first quarter of 2022,” Selma Hepp, chief economist at CoreLogic, wrote in a statement to Fortune.

The average homeowner in Florida saw the biggest gains, with average home equity rising $49,032 between the fourth quarter of 2021 and the fourth quarter of 2022. Meanwhile, the average homeowner in Idaho saw the biggest decline, with average home equity rising in that period fell by $21,352.

Through February, two-thirds of the regional housing markets tracked by Zillow have seen local home prices fall from their 2022 peaks. However, only 39 of the nation’s 400 largest major markets have seen local home prices fall by more than 5% on a seasonally adjusted basis. Almost all of those hard-hit markets are in the west. (Here’s house price data for the country’s 400 largest housing markets).

“While capital gains slowed in late 2022 due to falling home prices in some regions, U.S. homeowners still average about $270,000 more in home equity than they did at the start of the pandemic,” Hepp writes. “Even in Idaho, where borrowers were most vulnerable to losses, the typical homeowner with a mortgage still has about $250,000 in home equity.”

View the graph Average change in equity per home owner between Q4 2021 and Q4 2022

Let’s be clear: This year-over-year increase in equity does not mean that the US housing market has returned to boom mode.

In fact, almost all of these equity gains occurred during the first few months of 2022 (see chart below), when the pandemic housing boom — which sent national house prices up 41% between March 2020 and June 2022 — was in its final innings.

For 124 consecutive months, from the trough of the previous correction in February 2012 to the peak of the pandemic housing boom in June 2022, the seasonally adjusted Case-Shiller National Home Price Index reported positive home price increases. But with the onset of the ongoing housing market slump, that streak came to an end in the second half of 2022. Indeed, US home prices fell every month in the second half of 2022, ending the year at 2.7% below the June peak.

On an annual basis, national house prices are still up 5.8%. However, it is likely that national house prices, as measured by Case-Shiller, will be negative on an annualized basis sometime in the coming months as the high valuation months from early 2022 fall outside the 12-month window. When that happens, Hepp says, people shouldn’t overreact.

“Some suburban regions that rose in popularity during the COVID-19 pandemic saw prices rise and affordability eroding at the time, but these areas are now seeing major corrections. And while the price decline is likely to continue into spring 2023, when the market is likely to see year-over-year declines, the recent fall in mortgage rates has boosted buyer demand and could result in a more optimistic home buying season than many anticipated,” Hepp writes.

On a national basis, CoreLogic expects US home prices to be negative on an annualized basis around April. After that, CoreLogic expects national house prices to recover and return to around June 2022 peak levels by the end of 2023. (Here’s a rundown of other national house price forecasts).

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