If you’ve seen headlines about home prices softening, it’s natural to wonder how your home’s value, and your wealth, may be affected. Here’s the real story.
While some areas are seeing modest price dips, most homeowners are still significantly ahead thanks to the equity they’ve built over time.
Recent pullbacks don’t come close to outweighing several years of strong price appreciation. If you’ve owned your home for more than a few years, chances are you’re sitting on substantial equity today. And this trend holds true across nearly the entire country.
Recent data from the Federal Housing Finance Agency (FHFA) reinforces this:
Every single state has seen home prices increase over the past five years. That means homeowners everywhere have gained meaningful equity during that time (see graph below).
The Relationship Between Home Prices and Equity
Home prices and equity rise and fall together. When property values increase, so does your equity. When price growth slows, equity growth simply moderates, it doesn’t disappear.
Here’s what that’s looked like recently:
During 2020 and 2021, a historic shortage of homes for sale drove prices, and homeowner equity, rapidly upward as buyers competed for limited inventory.
But that pace wasn’t sustainable forever. As more homes hit the market this year, price growth slowed, easing the rapid climb in equity as well.
This doesn’t mean your equity has vanished, it simply means the market is leveling out after an unusually fast period of appreciation.
Putting It into Perspective
Even with slower price growth, most homeowners are in a stronger equity position today than they were just a few years ago, and that can be a major advantage if you’re considering selling.
According to research from Zillow, U.S. home prices have climbed an incredible 45% since March 2020.
In most markets, prices are still rising, just at a slower pace. And even in markets making headlines for declines, the average dip has been a mild -4%..
What does that really mean?
Those small declines are far outweighed by the sizable gains of the past five years. So, if you’ve owned your home for a while, you’ve likely built equity that was unimaginable pre-pandemic. That equity can help you move up, downsize, or relocate with confidence.
If you’re concerned about future price drops, here’s some reassurance from Jake Krimmel, Senior Economist at Realtor.com:
“The slight recent declines in aggregate value and total home equity are not cause for concern . . . Although the market is coming into better balance, large price declines nationally are extremely unlikely in the near term . . .”
In short, today’s market conditions represent a healthy rebalancing—not a crash.
After several years of rapid appreciation, today’s moderation is normal, and most homeowners remain in an exceptionally strong position.
Bottom Line
Even in markets where prices have dipped, homeowners are still holding near-record levels of equity.
Curious how much equity you’ve gained, or what your home may be worth today?
Let’s connect. You may be pleasantly surprised by how far ahead you really are.
