According to Zillow data, 53% of homes in the US have lost value over the past year.
During the 2008 crisis, characterized as the Great Recession, the rapid drop in home prices caused chaos for major financial institutions. Unfortunately, today a dangerous downward trajectory in US property prices is being observed again, along with an increase in foreclosures—developments that strongly recall the warning signs of the previous housing market collapse.
According to Zillow data, 53% of homes in the US have lost value over the past year.
"More than half of US homes lost value over the past year—the highest share of properties with decreased value in over a decade," the research notes, recalling that such levels have not been recorded since the end of the Great Recession in 2012, when the market finally began to recover.
The very bad news
The drop in prices finally offers some relief to those who want to buy a house, as the skyrocketing prices in previous years had excluded many from the market. A "corrective" wave was expected—and it is now arriving. However, the speed of the decline creates serious risks. Many homeowners are now "underwater," meaning they owe more than the value of their home. And we all remember what happened in 2008 when this situation became massive.
The pandemic "boomtowns" are receding
Areas that experienced explosive growth during the pandemic are now recording the biggest losses:
In Denver, 91% of homes have fallen from their peak value. In Austin, the percentage is 89%. In Sacramento, 88%.Significant blows are also being seen in Florida, as over 80% of homes in Jacksonville, Orlando, and Tampa are now worth less than a year ago. A similar decrease (over 85%) appears in Dallas and San Antonio.
If the decline accelerates, analysts warn, then we will be talking about an avalanche. Already, the US has experienced the largest decrease in home value since the end of the last housing crisis: "Most homes have lost an average of 9.7% from their peak value—much more than the 3.6% recorded in the spring of 2022."
The explosion of foreclosures returns
The rapid increase in foreclosures is particularly alarming, with investors and experts now openly comparing the situation to 2008. A striking example is Illinois, where foreclosures are increasing at a terrifying speed: In October, 1 in 2,570 homes had a foreclosure in progress—a total of 2,118 properties. Of these, 1,252 were new foreclosures and 187 were completed repossessions. The data are noticeably increased compared to September and last October.
"We've seen a clear uptick," said realtor Jason Merel, who operates in Chicago and the northern suburbs.
It "smells" like 2008
Today's data disturbingly recalls what preceded the 2008 crisis. If the situation does not stabilize soon, the housing market could enter a particularly dark period.
At the same time, large retail chains are announcing disappointing financial results, intensifying fears that the pressures on the housing market are simply the tip of the iceberg.
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