Just after mortgage rates spiked to 6%, Charlie Alvarez put his South Carolina home on the market in July 2022. He needed to sell for personal reasons. He was also worried that by listing after mortgage rates had spiked, he’d miss out on the frothy prices hit at the top of the Pandemic Housing Boom just months earlier.
“Originally, I thought we’d run into problems, I thought we’d sell for $350,000… But, we were on the market for less than a week, and had an offer,” Alvarez tells Fortune.
Alvarez ended up fetching his list price of $465,000 for his two-story craftsman-style home in Taylors, S.C. That’s 95% higher than the $238,500 he had paid for the four-bedroom home in 2015.
Even as the ongoing housing slump sees national home prices come down a bit from the peaks hit during the Pandemic Housing Boom, most homeowners are still up big-time. In fact, among the 46 states tracked by CoreLogic, 42 states saw average home equity levels rise between the fourth quarter of 2021 and the fourth quarter of 2022. Only California, Idaho, Utah, and Washington saw average equity levels fall between that year-over-year period.
“As U.S. home price growth continued its slow, steady decline in the final months of 2022, home equity trends naturally followed suit. In the fourth quarter of 2022, the average borrower earned about $14,300 in equity year-over-year, compared with the $63,100 gain seen in the first quarter of 2022,” wrote Selma Hepp, chief economist at CoreLogic, in a statement provided to Fortune.
The average homeowner in Florida saw the biggest gain, with average equity rising $49,032 between the fourth quarter of 2021 and the fourth quarter of 2022. Meanwhile, the average homeowner in Idaho saw the biggest decline, with average equity falling $21,352 during that period.
Through February, two-thirds of regional housing markets tracked by Zillow have seen local home prices fall from their 2022 peaks. However, only 39 of the country’s 400 largest major markets have seen local home prices fall by more than 5% on a seasonally adjusted basis. Almost all of those hard-hit markets are out West. (Here’s home price data for the nation’s 400 largest housing markets).
“While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity more than they had at the onset of the pandemic,” writes Hepp. “Even in Idaho, where borrowers were the most vulnerable to losses, the typical homeowner with a mortgage still has about $250,000 in remaining home equity.”
Let’s be clear: These year-over-year equity gains don’t mean the U.S. housing market has moved back into boom-mode.
In fact, almost all of these equity gains occurred during the first few months of 2022 (see chart below), when the Pandemic Housing Boom—which pushed national home prices up 41% between March 2020 and June 2022—was in its final innings.
For 124 consecutive months, from the bottom of the previous correction in February 2012 to the peak of the Pandemic Housing Boom in June 2022, the seasonally adjusted Case-Shiller National Home Price Index reported positive home price growth. But the onset of the ongoing housing slump, saw that streak end in the latter half of 2022. Indeed, U.S. home prices fell every single month in the second half of 2022, and closed the year 2.7% below the June peak.
On a year-over-year basis, national home prices are still up 5.8%. However, it’s likely that national home prices, as measured by Case-Shiller, will be negative on a year-over-year basis sometime in the next few months as the high appreciation months from early 2022 fall out of the 12-month window. When that happens, Hepp says, people shouldn’t overreact.
“Some exurban regions that became increasingly popular during the COVID-19 pandemic saw prices jump and affordability erode at the time, but these areas are now seeing major corrections. And while price deceleration will likely persist into the spring of 2023, when the market will probably see some year-over-year declines, the recent decrease in mortgage rates has stimulated buyer demand and could result in a more optimistic homebuying season than many expected,” writes Hepp.
On a national basis, CoreLogic expects U.S. home prices to be negative on a year-over-year basis by around April. Thereafter, CoreLogic expects national home prices to rebound and end 2023 back around peak levels achieved in June 2022. (Here’s a round-up of other national home price forecasts).
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This story originally Appeared on Fortune