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  • Writer's pictureWWH

Understanding Home Equity: More Than Just a Drop

Media reports may highlight a decline in homeowner equity, but it's important to consider the broader context. Home equity is closely tied to home values, so when prices rise, equity grows, and when prices fall, equity follows suit. While recent data shows a slight decrease in homeowner equity, the headlines fail to capture the whole story.

During the "unicorn" years, home prices experienced rapid appreciation, resulting in a significant boost to homeowner equity. However, the market eventually reached a point of moderation, as observed in the latter part of 2022.

Although equity dipped due to the modest decline in home prices, homeowners still maintain near-record levels of equity, as indicated by the latest CoreLogic report. While headlines may suggest otherwise, the reality is that overall homeowner equity remains significantly higher than pre-"unicorn" years.

Encouragingly, recent home price reports indicate that the worst of the declines is likely behind us, with prices starting to rise again. Experts forecast a more stable rate of home price appreciation in the coming year, offering homeowners the potential to regain some of the lost equity.

In summary, while there may be a drop in homeowner equity, it's crucial to understand the larger picture. Homeowners still possess substantial equity, and with positive trends in home prices, there is potential for equity to rebound. To gain a comprehensive understanding of your specific situation, it is advisable to consult a trusted real estate professional who can provide expert guidance tailored to your needs.


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