Why Your Home Equity Still Puts You Way Ahead

Even though you might hear that home prices are dropping, that doesn’t mean your home lost its value. In fact, most homeowners are still in a great position because of one thing — home equity.

What Is Home Equity?

Home equity is the amount of your home you truly own. When home prices go up, your equity grows too. Even if prices cool down a little, your equity doesn’t disappear — it just grows more slowly.

What’s Happening Now

In 2020 and 2021, home prices shot up fast because there weren’t enough houses for sale. Now that more homes are on the market, prices have slowed — but that’s a good thing! It means the market is finding balance again.

The Big Picture

According to Zillow, home prices have risen about 45% since March 2020. Even in the few areas where prices dipped a little (around 4%), the gains from the last five years still far outweigh those small drops.

Every single state has seen prices increase over the past five years, according to the Federal Housing Finance Agency.

What Experts Say

“The small declines we’ve seen aren’t a reason to worry. Large price drops are extremely unlikely anytime soon.” — Jake Krimmel, Senior Economist at Realtor.com

Bottom Line

Even with a few price dips here and there, homeowners today are still sitting on near-record levels of equity.