Buying a house is a major milestone and a rite of passage that has long been considered a great way to build long-term wealth.
Home values tend to rise over time, and recent years have been kind in that respect. As Money reporter Brenden Rearick writes, U.S. homeowners with mortgaged properties gained over $1.1 trillion in equity during the third quarter of 2023, with New Jersey, California and five other states seeing year-over-year increases that topped $40,000.
Sometimes, though, the opposite happens.
Many people who bought homes in 2022 and earlier this year are in a particularly tricky situation. According to a recent report from Point2Homes, a real estate search site, single-family homes purchased in many of the hottest markets last year have lost as much as $223 in value per day. That works out to a little more than $81,000 lost between September 2022 and September 2023; a big chunk of change for most American families.
The cities with the most significant drop in median home price include:
- San Francisco - down by $81,250
- Oakland, California - down by $62,988
- Atlanta, Georgia - down by $44,000
- Memphis, Tennessee - down by $35,000
- Urban Honolulu, Hawaii - down by $27,499
It’s not just house owners feeling the pinch, either. During the same period, condo owners lost even more, especially in San Francisco. Condo owners in the Golden City lost an average of $336 daily, or about $122,000 a year (an even bigger chunk of change for the average American).
How concerned should the rest of us be? Andra Hopulele, author of the report, tells me that since price drops are happening in some markets, not all, this shouldn’t be considered a generalized trend. And while owners who bought when prices and mortgage rates were rising “might be disappointed” by the drop in their home’s value, if they’re not actively trying to sell, it might not matter all that much.
“Those who bought a home and are still living in it have plenty of time to see the value of their home go up in future years,” she said.
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