A Bifurcated Housing Market: The Average Homeowner in Idaho Sees Their Net Worth Drop by $21,000, While the Typical Homeowner in Florida Earns $49,000 in 2022

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

“Initially I thought we’d be in trouble, I thought we’d sell for $350,000…But we had been on the market for less than a week and had an offer,” Reedy says. Fortune.

Reedy ended up fetching his list price of $465,000 for his two-story craftsman-style home in Taylors, South Carolina. That’s 95% more than the $238,500 he paid for the four-bedroom home in 2015.

Even though the ongoing housing crisis is pushing national home prices down a bit from the highs reached during the pandemic housing boom, most homeowners are still up. In fact, of the 46 states tracked by CoreLogic, 42 states saw average home equity levels increase between the fourth quarter of 2021 and the fourth quarter of 2022. Only California, Idaho, Utah and Washington have seen average levels of net worth fall between this year-over-year period.

“As U.S. home price growth continued its slow and steady decline in the final months of 2022, home equity trends naturally followed. In the fourth quarter of 2022, the average borrower gained about $14,300 in equity year-over-year, compared to the $63,100 gain seen in the first quarter of 2022,” Selma Hepp, an equity economist, wrote. chief at CoreLogic, in a statement provided to Fortune.

The average homeowner in Florida saw the largest gain, with average net worth increasing by $49,032 between the fourth quarter of 2021 and the fourth quarter of 2022. Meanwhile, the average homeowner in Idaho saw the most sharp drop, with the average net worth dropping by $21,352 during this period.

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

“While equity gains contracted in late 2022 due to lower home prices in some regions, US homeowners still have on average about $270,000 more equity than they have. had 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 of net worth remaining.”

See the graph of the average change in home equity per owner between the fourth quarter of 2021 and the fourth quarter of 2022

Let’s be clear: these year-over-year stock market gains do not mean that the US housing market is back in boom mode.

In fact, almost all of these capital gains took place in 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 run.

For 124 consecutive months, from the low 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 has reported positive home price growth. But the onset of the ongoing housing crisis saw that streak come to an end in the second half of 2022. Indeed, US home prices fell every month during the second half of 2022 and closed the year at 2 .7% below the June peak.

Year over year, national home prices are still up 5.8%. However, national home prices, as measured by Case-Shiller, are likely to be negative year-over-year for the next few months as the months of strong appreciation from the start of 2022 come out of the 12 month window. When this happens, Hepp says, people shouldn’t overreact.

“Some peri-urban areas that have become increasingly popular during the COVID-19 pandemic saw prices jump and affordability erode back then, but these areas are now seeing major corrections. And while the deceleration prices will likely persist through the spring of 2023, when the market is likely to see year-over-year declines, the recent drop in mortgage rates has boosted buyer demand and could lead to a more optimistic home-buying season than many had anticipated,” writes Hepp.

Nationally, CoreLogic expects U.S. home prices to be negative year-over-year around April. Going forward, CoreLogic expects national house prices to rebound and end 2023 around peak levels reached in June 2022. (Here’s a roundup of other national house price forecasts).

Want to stay up to date on the housing market? Follow me on Twitter at @NewsLambert.

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