If you’ve been reading headlines about home prices dropping, you might be wondering — is my home losing value too? The short answer: probably not. Even with slight price dips in some markets, most homeowners are still sitting on record amounts of equity. Here’s why that matters more than the short-term headlines.
Understanding the Connection Between Home Prices and Home Equity
Your home equity moves in the same direction as home prices — when prices rise, equity grows. When prices cool slightly, equity growth slows down too. But the important thing to remember is this: after the massive price surge of 2020 and 2021, some moderation was both expected and healthy.
During those years, the number of homes for sale hit historic lows, pushing home values (and homeowner equity) to new highs as buyers competed for limited inventory. Now that more homes have entered the market, price growth has simply leveled out. That doesn’t mean you’ve lost ground — it means the housing market is finding balance again.
You’re Still Far Ahead of Where You Were
Even with today’s small price adjustments, most homeowners still have significantly more home equity than they did just a few years ago.
📊 According to Zillow, home prices have climbed roughly 45% nationwide since March 2020.
Even in the metros where prices have cooled the most, the average decline is only around 4%. In other words, five years of steady appreciation easily outweigh these modest dips.
This means that if you’ve owned your home for several years, you’re still in an incredibly strong financial position — and likely sitting on equity gains that could help you:
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Upgrade to a new home
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Downsize and cash in on your appreciation
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Fund home improvements or investments
Data from the Federal Housing Finance Agency (FHFA) backs this up: home values have risen in every single state over the past five years. So no matter where you live, your property has almost certainly gained value since 2020.
Why Experts Say There’s No Need to Worry
If you’re concerned about where the market’s headed next, take it from Jake Krimmel, Senior Economist at Realtor.com:
“The slight recent declines in aggregate value and total home equity are not cause for concern. Although the market is coming into better balance, large price declines nationally are extremely unlikely in the near term.”
In short, what we’re seeing right now is stabilization, not a downturn. After years of rapid appreciation, the housing market is simply normalizing — and most homeowners remain in a great position.
The Bottom Line
Even though home prices have softened slightly in some areas, today’s homeowners still hold near record levels of equity.
If you’re curious how much your home is worth or how your equity could work for your next move, connect with a trusted local real estate expert. You may be pleasantly surprised by how much financial power your home holds today.