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US Homeowners Lose $2.3 Trillion Since June: Redfin Report

According to a report from real estate brokerage Redfin, US homeowners have lost $2.3tn since June 2022. The total value of US homes was $45.3tn at the end of the year, down 4.9% from a record high of $47.7tn in June, marking the largest June-to-December percentage decline since 2008.

Redfin building
Redfin building

Redfin, a real estate brokerage, has published a report showing that US homeowners have lost $2.3 trillion since June 2022. The total value of US homes was $45.3 trillion at the end of the year, a 4.9% decrease from the record high of $47.7 trillion in June. This marks the largest June-to-December percentage decline since 2008.

Increased Mortgage Rates Affect Homeownership

The report is being released amidst increased mortgage rates as the Federal Reserve tries to curb inflation. The 30-year fixed mortgage rate was 6.36% in December, nearly twice what it was at the start of 2022. Despite rates falling in early February, they have since risen to December levels, discouraging potential buyers. As a result, Americans are becoming more reluctant to buy homes, and prices are dropping.

Bay Area Sees Biggest Drop in Real Estate Value

Redfin highlighted the Bay Area, stating that it has experienced the biggest drop in real estate value compared to other regions in the country. For example, the total value of homes in San Francisco fell 6.7% in December to $517.5 billion, a $37.3 billion decrease from the previous year. On the other hand, the report notes that the Florida housing market remains robust, with the largest increase in real estate value compared to other parts of the country.

Redfin 'for sale' sign
Redfin 'for sale' sign

Suburban Homes Outperform Urban Homes

The report also states that US cities are faring worse than US suburbs regarding real estate value. While the value of urban homes increased 2.5% to $10.8 trillion year over year, the value of suburban properties jumped 6.4% year over year, to $25.4 trillion, in December.

Market Showing Signs of Recovery

While some experts see a potential "armageddon" in the real estate market, others believe that the most challenging time for the market has passed. For example, in January, confidence among single-family home builders rose for the first time in over a year, according to the National Association of Home Builders/Wells Fargo. Pending home sales increased 2.5% in December, ending a six-month decline. Redfin Economics Research Lead Chen Zhao stated that the total value of US homes remains roughly $13 trillion higher than in February 2020, before the coronavirus pandemic was declared. However, many Americans missed out on a significant wealth-building opportunity due to their inability to afford homes even when mortgage rates were low in 2021.