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U.S. Owners Lost Equity – But Not Many Floridians

By Kerry Smith

Americans lost an average 4.9% of their home equity since June ($2.3T). But many Fla. metros bucked the loss trend, with Miami up 19.7% year over year ($77B).

SEATTLE – The total value of U.S. homes was $45.3 trillion at the end of 2022, down 4.9% ($2.3 trillion) from a record high of $47.7 trillion in June, according to a report from Redfin. It’s the largest June-to-December drop in percentage terms since 2008.

On a year-to-year basis, the total value of U.S. homes was up 6.5%. While positive, it’s still the smallest one-year increase during any month since August 2020.

Florida metros, however, haven’t seen the same reduction in value as their brethren to the north.

The total value of Miami homes rose 19.7% year-to-year (up $77 billion to $468.5 billion) in December – the largest annual increase in percentage terms among the metros Redfin analyzed. While U.S. cities overall lost 4.9% in equity, Miami saw little change over the June-to-December period ($472 million in June). Other cities in the top-five-equity list include:

  1. Miami: Up 19.7%
  2. North Port-Sarasota, Fla.: Up 17.8%
  3. Knoxville, Tenn.: Up 17.7%
  4. Charleston, S.C.: Up 17.4%
  5. Lakeland, Fla.: Up 16.9%

Of the top 10 equity-higher metro areas, Florida held six of the top 10 spots for largest annual home-value gains in percentage terms, even though Hurricane Ian caused billions of dollars in damage and displaced thousands of Floridians in fall 2022.

“Florida’s housing market is being sustained by folks moving in from the North and, as of recently, the West Coast,” says Elena Fleck, a Redfin real estate agent in Palm Beach. “People are pouring in from New Jersey and New York, in large part because Florida has relatively affordable homes and no income tax. They can get a lot more bang for their buck here.”

Why the drop in equity?

The housing market has shed value because homebuyer demand waned, which is also the primary driver of home price declines. The median U.S. home sale price was $383,249 in January, down 11.5% from a peak of $433,133 in May, and up just 1.5% from January 2022.

Homebuyer demand slowed in large part due to rising mortgage rates that roughly doubled from the beginning of 2022 – a consequence of the Federal Reserve’s effort to curb inflation. The average 30-year fixed mortgage rate was 6.36% in December, down from a 20-year high of 7.08% in November.

“The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom,” says Redfin Economics Research Lead Chen Zhao. “The total value of U.S. homes remains roughly $13 trillion higher than it was in February 2020, the month before the coronavirus was declared a pandemic.”

Unfortunately, Zhao says, a lot of people were left behind. “Many Americans couldn’t afford to buy homes even when mortgage rates hit rock bottom in 2021, which means they missed out on a significant wealth building opportunity.”

The San Francisco Bay area took the biggest equity hit. The total value of San Francisco homes fell 6.7% year over year to $517.5 billion in December (a $37.3 billion decline). Next came two other Bay Area markets, with the top equity-losing metros including:

  1. San Francisco: Down 6.7%
  2. Oakland, Calif.: Down 4.5%
  3. San Jose, Calif.: Down 3.2%
  4. New York: Down 1%
  5. Seattle: Down 0.4%
  6. Boise, Idaho: Down 0.3%

Other notable equity changes

  • Year-to-year, the total value of homes in American suburbs rose 6.4% to $25.4 trillion in December, and the value of urban homes climbed 2.5% to $10.8 trillion.
  • Rural homes – a relatively small portion of the housing market – also fared better than cities, with total home value increasing 8.5% to $6.2 trillion.
  • The total value of U.S. homes owned by millennials rose 26.7% to $5.6 trillion in the third quarter of 2022 – the most recent period for which data is available. Generation X saw the second largest increase (up 18.4% to $13.9 trillion), followed by Boomers (up 12.9% to $18.1 trillion). The Silent Generation experienced a decrease (down 6.7% to $4.4 trillion).
  • Climate change made little difference. Home values in higher-risk places performed roughly the same or better than home values in places with low climate risk.
  • Flood-risk homes (up 8.1%) outperformed low-flood-risk homes (up 5.5%).
  • Heat-risk homes (up 7.3%) outperformed low-heat-risk homes (up 1.9%).
  • Storm-risk homes saw little change compared to low-storm-risk homes
  • Drought was the only natural disaster that saw low-risk home prices (up 6.6%) climb higher than high-risk homes (up 3.7%).

© 2023 Florida Realtors®

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