Falling Home Prices Hit Half of U.S. Homes, 78.5% in LA

More than half of homes across the country have lost value over the past year, and the Los Angeles area is among the markets most affected by falling home prices. Even so, most homeowners still hold sizable gains because they have owned their properties for many years.

According to real estate platform Zillow, as of October, 53% of homes nationwide were worth less than they were a year earlier. That share is up sharply from 16% a year ago and is the highest level since April 2012. Zillow said the trend of homes losing value is spreading across almost all U.S. cities and noted that after several years of steep price increases, some value declines are a natural step now that many properties have already hit their peak.

The impact is most visible in large metros in the West and South. Among 64 major metros in those regions, 49 saw a higher share of homes losing value than gaining value. The metro with the largest share of homes down from a year earlier was Denver, at 91%. It was followed by Austin in Texas at 89%, Sacramento in California at 88%, and both Phoenix in Arizona and Dallas in Texas at 87%.

In Los Angeles, 78.5% of homes were worth less than a year earlier. The pattern was similar in other Southern California markets, with San Diego at 77.8% and Riverside at 74.3%.

By contrast, major metros in the Northeast and Midwest have seen smaller impacts so far. Among 36 large metros in those regions, only three had more than half of homes down in value: Minneapolis in Minnesota at 55%, Des Moines in Iowa at 54%, and Scranton in Pennsylvania at 52%.

Even with these one-year drops, most owners remain well ahead of where they started. Zillow data show that, for homes with a recorded sales history, the last time they were purchased was on average 8.6 years ago. Over that period, their values have risen by 67.2% on average.

As of September, only 5.9% of homes were worth less than their previous sale price. That is up from 2.8% a year earlier but still below the pre-pandemic level of 7.9%. Among homes newly listed for sale, just 3.4% came to market at a price below their last sale price, indicating that selling at a loss is not yet the norm.

For homes that did see a price cut, the average reduction was 9.1%. That is larger than the 3.5% average seen in the spring of 2022, but still much smaller than the average 27% decline recorded in early 2012.

In markets with the steepest recent declines, homes that have lost the most value are, in fact, less likely to be listed for sale. Experts interpret this as a sign that many owners can afford to wait for conditions to improve. Homeowners who bought or refinanced during the pandemic often locked in low mortgage rates and still hold substantial equity, making them more willing to stay put while the market adjusts and falling home prices work through the system.

BY HOONSIK WOO [woo.hoonsik@koreadaily.com]