In a recent report from Zillow, it was revealed that over half of U.S. homes, approximately 53%, have lost value in the past year, marking the highest rate of depreciation observed in more than a decade. This figure represents a significant increase of 14% from the previous year and is reminiscent of trends seen during the latter part of the Great Recession in 2012. On average, home values have decreased by about 9.7% from their peak, a notable rise from the 3.6% decline reported in spring 2022, yet still within the range of pre-COVID-19 levels.
Zillow's senior economic researcher, Treh Manhertz, noted that while homeowners might be unsettled by these changes, such depreciation is more typical in the current cooler market environment. Despite the increase in devalued homes, the report indicates that only a small fraction of properties are being sold at a loss. Manhertz emphasized that the value of a home at the time of sale is more critical than the overall decline in value.
Currently, 4.1% of homes are valued lower than when they were last sold, an increase from 2.4% the previous year, but still below the 11.2% recorded prior to the pandemic. Although national home value appreciation has stagnated over the past year, many homeowners continue to see significant increases in property values since their purchases, with median home values rising 67% over approximately eight and a half years.
Certain metropolitan areas have experienced even steeper increases, with Buffalo seeing home values rise by 108%, followed closely by San Jose and Providence. These regional trends are attributed to supply constraints and longer tenures of homeowners in those markets.