A Drop in Equity Doesn’t Mean Low Equity

Media coverage often mentions a decline in homeowner equity, which is closely tied to home values. When home prices rise, equity grows, and when prices fall, so does equity. Recently, home prices experienced a slight drop in the latter half of 2022, impacting equity. However, despite this dip, homeowners still possess near-record levels of equity. Looking at the graph below, it's evident that there was a significant increase in equity during the 'unicorn' years when home prices appreciated rapidly. Importantly, even with the recent small decrease, total homeowner equity remains significantly higher than pre-'unicorn' levels.

Recent reports indicate a positive trend in home prices, with declines behind us and prices on the rise. Home equity closely follows these price changes, showing an increase from the fourth quarter of 2022 due to accelerated growth in early 2023. Experts forecast more typical price appreciation over the next year, helping homeowners regain lost equity. Despite a slight dip, homeowner equity remains near all-time highs, with the average homeowner possessing significant equity. Contact us for expert assistance as you plan your move this year.