After two years of double digit growth, home values in the US are falling.
Much of that decline is attributable to a steep rise in mortgage rates, which have greater than doubled over the past yr. As borrowing costs rose, many potential homebuyers stepped away from the market. As demand eased up, home prices (and their estimated values) began to fall.
Listed below are the cities where home values fell probably the most from November to December, in keeping with recent data from Zillow. The info relies on Zillow’s Home Value Index, which uses the corporate’s data to measure how much a typical house is price.
- Seattle, Washington: -4.81%
- Dallas, Texas: -1.47%
- San Antonio, Texas: -1.33%
- San Diego, California: -1.33%
- Austin, Texas: -1.30%
- Salt Lake City, Utah: -1.29%
- Phoenix, Arizona: -1.20%
Across your entire country, the worth of a typical home fell 0.2% between November and December, in keeping with Zillow. On an annual basis, home values are still up 8.4%.
As all the time, it’s price remembering that real estate trends can vary widely on the local level. Home values in Milwaukee, Wisconsin, actually rose 1.1% over the identical time period, in keeping with Zillow, while values in Birmingham, Alabama rose 1%.
What happens when home values drop?
Falling home values are scary, but “that doesn’t necessarily mean doom and gloom,” Douglas Elliman real estate broker Jessica Peters recently told Money.
There are some real risks, after all: Some sellers could find yourself taking a loss, depending on once they purchased their home, and residential equity borrowers won’t give you the option to borrow as much. Recent buyers must also be wary of going underwater on their mortgage.
The upside for potential buyers is that falling home values means lower prices — assuming they will afford to purchase at today’s rates.
However the decrease in home prices could also be a short-lived trend. Many experts imagine mortgage rates will come down this yr, and it’s possible that the housing market will get a little bit more competitive if that happens.
“I expect recent listings to stay scarce as homeowners hold onto low rates of interest while the pool of determined buyers circle the few homes which might be available,” Seattle Redfin agent Shoshana Godwin said in a recent news release.
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Here’s How Low Mortgage Rates Could Drop in 2023, In keeping with One Expert