How much value has your home lost? Maybe more than you think

Photo (c) LeManna - Getty Images

On the other hand, homeowners in some markets are still seeing home values rise

Maybe you have no intention of selling your home anytime soon so a decline in home prices is not a big concern. At the same time, the equity in your home probably makes up a big piece of your net worth.

The good news? The decline in home values has slowed from the summer months. But the bad news is that homeowners nationwide lost $1.3 trillion in home equity in the third quarter of this year, according to a report by Black Knight, a property data firm. It’s the largest quarterly dollar decline on record and the largest on a percentage basis since 2009.

“As we reported at the time, while hitting a record high in Q2, total homeowner equity peaked mid-quarter in May and has been pulling back ever since,” said  Ben Graboske, president of Data & Analytics at Black Knight. Equity among mortgaged properties is now down nearly $1.5 trillion since that point.”

For most homeowners who purchased their homes five or more years ago, the decline in values may not be all that concerning. But the report shows the number of mortgage holders who are now underwater more than doubled during that time. Still, Graboske says that’s hardly cause for alarm.

“It's important to note that -- even with 275 thousand falling underwater since May -- fewer than half a million homeowners owe more on their homes than their current values,” he said. Historically speaking, that is still extremely low.

Recent buyers are feeling the most pain

Most underwater borrowers purchased homes in 2020 and 2021, as prices were reaching record highs during the pandemic. Most obtained low fixed-rate mortgage rates, meaning their payments haven’t changed, even though they have lost equity.

Many housing experts say home prices are simply returning to earth after the massive increase since the start of the COVID-19 pandemic. According to the Federal Reserve, the U.S. median home value in the first quarter of 2019 was $313,000. In the third quarter of this year, it was $454,000.

Your home may not have lost much value at all, depending on where you live. Prices have suffered the sharpest declines in the nation’s most expensive markets. According to the Knock Buyer-Seller Market Index, homes in 98 of the 100 hottest housing markets have seen steep price declines. 

But the same report projects that homes in 13 U.S. housing markets are still rising in price. They include Winston-Salem, N.C., Fayetteville, Ark., and Seattle.

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