THE value of the US housing market shrank by the most since the 2008 as the pandemic boom fizzled out.

Real estate brokerage Redfin said that the total value of US homes declined by US$2.3 trillion, or 4.9 per cent, in the second half of 2022. This came after a peak of US$47.7 trillion in June 2022, and was the largest drop in percentage terms since the 2008 housing crisis, when home values slumped by 5.8 per cent from June to December.

Homebuyers are already facing record-high prices. They took an additional hit from mortgage rates that more than doubled last year. With less competition in the market, the median sale price of US homes was US$383,249 in January. This was down from a peak of US$433,133 in May 2022.

Chen Zhao, economics research lead at Redfin, said: “The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom.” She added that the total value of homes remained about US$13 trillion higher than in February 2020.

To be sure, home prices are not collapsing. In December 2022, the total value of US houses was still 6.5 per cent higher than it was a year earlier.

Florida gains

How much homeowners lost depends on where they bought. The biggest declines were in pricey cities, such as San Francisco and New York. On the other hand, buyers who moved to pandemic boomtowns are still seeing returns on their investments, particularly in Florida.

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This was especially true in Miami, where the total value of homes ballooned 20 per cent year-on-year to US$468.5 billion in December 2022. The gain was the largest annual percentage increase among the top metro areas.

While the overall US housing market is down, Miami’s market has about the same value as when it peaked at US$472 billion last July. Meanwhile, homeowners in North Port-Sarasota, Florida, Knoxville, Tennessee, and Charleston, South Carolina, all saw annual gains of more than 17 per cent in 2022.

As tech workers fled for more affordable locales, the total value of homes in San Francisco slumped by 6.7 per cent year-on-year last December, the most of any major US metro area. This was followed by dips in Oakland and San Jose, which lost 4.5 per cent and 3.2 per cent, respectively. Other urban areas, such as New York and Seattle, also saw annual declines.

Elena Fleck, a Redfin real estate agent in Palm Beach, Florida, said: “Florida’s housing market is being sustained by folks moving in from the north and, as of recently, the West Coast.” BLOOMBERG