Half of Homes Lost Value Over the Past Year, Says Zillow. But It’s Not as Bad as It Sounds
Homeowners hold nearly $36 trillion in home equity. This small decline in home values is barely noticeable to most.
"Home values are falling for more than half of U.S. households," according to new research from Zillow®, published on Monday. "53% of all U.S. homes have lost value since last year — the highest share since 2012, the tail end of home value declines after the Great Recession."
That sounds scary. And, it's not good, at least not for homeowners. But, dig deeper into the figures, and you find very few homeowners are affected, at least yet.
A Paper Loss
Most homeowners want to build "equity," which is the positive difference between a home's market value and its current mortgage balance. And a year in which equity has widely fallen isn't welcome.
But losses and gains in equity are only relevant when homeowners come to sell, refinance or leverage their equity through a home equity loan or home equity line of credit (HELOC). And most don't do that all that often. The rest of the time, equity is just a number on a screen or a piece of paper.
And the vast majority of homeowners retain positive equity. Only 4.1% of homes have lost value since their owners purchased them, according to Zillow.
Many still have equity coming out of their ears. In its owners' equity in real estate chart, the Federal Reserve Bank of St. Louis reckons that, in the second quarter of 2025, homeowners in the U.S. shared home equity of $35.78 trillion.
To put that number in perspective, it's over $104,000 for every man, woman, and child in the U.S. — homeowner or not. It's a number that can only be beated by the U.S. national debt, which currently stands at $38 trillion.
American homeowners are in a very good position, despite trivial equity drops.
Where Equity Is Most Threatened
- Little Rock, AR — 19.7% of homes had values at least 5% below their last sale price
- Austin, TX — 11.9%
- Cape Coral, FL — 11.4%
- North Port, FL — 10.0%
- Birmingham, AL — 5.7%
- San Francisco, CA — 5.2%
- San Antonio, TX — 4.5%
- Tampa, FL — 4.4%
- Dallas, TX — 3.9%
- Lakeland, FL — 3.4%
For some of those cities, this year's figure will come as a relief. Residents of Little Rock, for example, may be relieved that only 19.7% of homes had dropped below their original purchase price after earlier rates of 40% in 2019 and 20.2% in 2024.
"Only 3.4% of new listings coming to market are priced below their last sale price, under the 4.1% share of all homes with Zestmates below previous price," says Zillow. "While this has risen from 2.1% a year ago, the difference shows that owners are not being driven to sell their homes or list at large discounts." ("Zestimates" are values ascribed by Zillow's proprietary online appraisal tool.)
We can't pretend that a year in which most homes lost value is anything other than bad news. But it's not the disastrous, awful, scary news that headline reporting might suggest.
