53% of Homes Lost Value in the Past Year. But Here's What That Number Doesn't Tell You

A headline landed this week that's making homeowners nervous: According to Zillow research, 53% of all U.S. homes lost value over the past year—the highest share since 2012.

If you're a homeowner who checks your Zestimate occasionally, you might have noticed your home's value peak and then tick downward. And if you're like most people, that drop probably felt concerning. Maybe even alarming.

But here's what most of those headlines won't tell you: This isn't a crash. It's not even close. And for the vast majority of homeowners, it's not a problem.

What's happening is a market normalization after six years of unprecedented growth. And understanding the difference between short-term value fluctuations and long-term equity position is critical to making smart decisions about your home.

Let me walk you through what's actually happening, why the headline number is misleading, and what this means for your specific situation—whether you're thinking about buying, selling, or just trying to understand if you should be worried.

The Number Everyone's Quoting (And What It Really Means)

According to Zillow's November 2025 research, 53% of U.S. homes lost value between October 2024 and October 2025, as measured by their Zestimate. That's up dramatically from just 14% a year earlier, and it's the highest proportion of homes declining in value since April 2012, when the housing market was hitting bottom after the Great Recession.

On the surface, that sounds bad. More than half of homes losing value sounds like a market in freefall.

But here's the critical context most people miss: This measures year-over-year value changes, not whether homeowners are actually losing money on their investment.

The median homeowner has owned their property for 8.6 years. Over that time, according to Zillow data, home values are up a median of 67%. That's not a typo. Sixty-seven percent growth since purchase.

So while 53% of homes may have lost some value compared to last year, only 4.1% of homes are currently worth less than when they were last sold. And that 4.1% is actually lower than the 11.2% of homes in the same position before the pandemic.

Translation: Most homeowners are sitting on massive equity gains, even if their home's value dropped slightly from its peak.

Why This Is Happening (And Why It's Not a Crash)

The housing market experienced explosive growth from 2020 to 2022. Pandemic-era demand, historically low mortgage rates, and limited inventory created a perfect storm that pushed home values to unsustainable levels in many markets.

What we're seeing now is a correction, not a collapse.

Treh Manhertz, senior economic researcher at Zillow, explained it directly: "Homeowners may feel rattled when they see their Zestimate drop, and it's more common in today's cooler market environment than in recent years. But relatively few are selling at a loss. Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we're seeing now is a normalization, not a crash."

National home value appreciation has been roughly flat over the past year, but that average masks significant regional variation. Some areas are still seeing growth. Others are seeing corrections from unsustainable peaks. But very few are seeing the kind of value destruction that would put homeowners underwater on their mortgages.

Most homes have declined from their peak by an average of 9.7%. That's larger than the tiny 3.6% drawdowns seen in spring 2022, but it's on par with pre-pandemic fluctuations. And it's nowhere near the 27% average drawdown seen in early 2012 during the actual housing crisis.

This is what healthy market normalization looks like. It's not dramatic. It's not a crash. It's just math correcting after a period of irrational exuberance.

The Regional Reality: Where Values Are Falling (And Where They're Not)

The headline number of 53% hides massive geographic differences. According to Zillow's analysis, metros with the largest share of homes that lost value are concentrated across the West and South—the same regions that saw explosive pandemic-era growth.

Markets Seeing the Steepest Declines

Markets like Denver, Austin, Sacramento, Phoenix, and Dallas are seeing 87% or more of homes lose value year-over-year. In Dallas specifically, nearly 87% of homes lost value according to the Zillow study. Denver saw 91% of home values drop from their peaks, followed by 89% in Austin and 88% in Sacramento.

These markets share common characteristics: They experienced massive pandemic-era booms, saw aggressive building activity, and are now working through oversupply and affordability challenges.

But here's what matters: Even in these markets, most homeowners who bought before 2022 still have significant equity. The losses are measured from peak valuations reached in 2022-2023, not from original purchase prices.

Markets Holding Strong

Meanwhile, markets in the Northeast and Midwest are showing very different dynamics. According to Zillow, Providence, Milwaukee, and Cincinnati all have less than 1% of new listings priced below their last sale price. Thirteen other metros across the Northeast, Great Lakes region, South, and Midwest have less than 2%.

These markets didn't experience the same pandemic-era frenzy, so they're not experiencing the same correction. They maintained more rational pricing throughout the boom, and they're benefiting from that discipline now.

What This Geographic Split Means

The lesson is clear: National averages are useless for understanding your specific situation. What's happening in Austin doesn't tell you anything about what's happening in Milwaukee. And what's happening in your specific neighborhood matters more than what's happening in your metro area.

If you're in a market that saw explosive pandemic-era growth, some value correction is normal and expected. If you're in a market that stayed relatively stable, you're likely experiencing continued modest growth.

What This Means If You're a Current Homeowner

If you own a home and you've seen your Zestimate drop, here's what you need to know.

Don't Panic About Short-Term Fluctuations

Home values fluctuate. That's normal. What matters is your long-term equity position, not whether your home is worth 3% less than it was six months ago.

If you bought your home more than a few years ago, you almost certainly have significant equity. The median homeowner has seen 67% value growth since purchase. Even if your home dropped 10% from its peak, you're likely still way ahead of where you started.

Equity vs. Value: Understanding the Difference

There's a critical difference between your home losing some value from its peak and your home being "underwater" (worth less than you owe).

According to Zillow data, just 4.1% of homes are currently valued lower than when they were last sold. That's the number that actually matters for financial stability. And it's lower than pre-pandemic levels.

If you're part of the 95.9% of homeowners whose homes are worth more than you paid, short-term value fluctuations are just noise. They don't affect your financial position unless you need to sell immediately.

When You Should Actually Be Concerned

You should pay attention to home value declines if:

• You need to sell soon and bought at the peak
• You're in an area with declining fundamentals (job losses, population decline)
• You're highly leveraged with little equity cushion
• You're considering a cash-out refinance and need a certain value

For most long-term homeowners, value fluctuations are background noise that doesn't affect their actual financial picture.

What This Means If You're Buying

If you're a buyer, the news that 53% of homes lost value might sound like opportunity. And in some ways, it is. But it's more nuanced than "prices are falling, so buy now."

Some Markets Are Creating Opportunity

Markets that saw massive pandemic-era growth and are now correcting—parts of Texas, Florida, Arizona, Nevada—offer potential value for buyers who understand what they're getting.

More inventory. Less competition. Motivated sellers in some cases. These dynamics create negotiating leverage that didn't exist in 2021-2022.

But you need to understand why prices are falling. Is it because of temporary oversupply that will correct? Or is it because of fundamental economic issues that will persist?

Markets cooling due to overbuilding during the boom can create value opportunities. Markets cooling due to job losses or climate risk are trickier.

Other Markets Are Still Competitive

Markets in the Northeast and Midwest that didn't see explosive pandemic growth aren't experiencing significant corrections. According to Zillow, these markets have very few homes selling below previous purchase prices.

If you're buying in these markets, don't wait for dramatic price drops. They're not coming. These markets are showing steady, sustainable growth, not boom-and-bust cycles.

The Timing Question

Many buyers ask: Should I wait for prices to drop more?

Here's the reality: In markets already seeing corrections, further significant drops are unlikely unless something fundamental changes (major recession, mass job losses, etc.). The correction is already happening.

In markets not seeing corrections, waiting for drops that aren't coming means missing opportunities and potentially facing higher prices as inventory tightens.

The right time to buy isn't when prices hit some theoretical bottom. It's when you find a home that meets your needs at a price that makes sense for your budget, in a market with sound fundamentals.

What This Means If You're Selling

If you're thinking about selling, understanding whether your market is part of the 53% that's seen value declines—and more importantly, how your specific home is positioned—is critical.

Don't Overprice Based on Peak Values

One of the biggest mistakes sellers make in cooling markets is pricing based on what their home was worth at the peak rather than what it's worth today.

According to Realtor.com data referenced in recent forecasts, sellers are walking away from listings at higher rates than normal because they won't adjust on price. Don't be that seller.

If your home's value peaked in 2022 and has declined 8% since then, pricing at the 2022 peak means your home will sit. And sitting homes eventually sell for less than well-priced homes that move quickly.

Most Sellers Still Have Significant Equity

Here's the good news: The lengthy average tenure among today's homeowners means most are in a position to walk away with significant gains even if they sell for less than peak value.

If you bought in 2018 and your home is worth 50% more today, the fact that it was worth 60% more last year doesn't change your strong financial position.

According to Zillow, the median home value has jumped roughly 67% since it was last sold. Even with recent corrections, most sellers are cashing out substantial gains.

Regional Positioning Matters

If you're in a market seeing widespread value declines (West/South metro areas), understand you're selling into a buyer's market. Price aggressively from day one. Be prepared to negotiate. Accept that you might not get peak pricing.

If you're in a market with limited supply and stable values (Northeast/Midwest), you have more leverage. But you still need to price realistically based on current market conditions, not what you think your home should be worth.

The Broader Context: What This Says About the Market

The fact that 53% of homes lost value over the past year tells us something important about where we are in the housing cycle.

This Is Normalization, Not Crisis

Markets don't go up forever. After six years of exceptional growth, some correction is healthy and expected. What we're seeing is a market returning to more sustainable patterns.

Mischa Fisher, Zillow's chief economist, called this "the best news for buyers in a very long time," noting that affordability has reached a three-year peak. That normalization is creating opportunities for buyers who were priced out during the frenzy.

The Geographic Divergence Is Key

The split between markets seeing corrections (West/South) and markets seeing continued growth (Northeast/Midwest/select metros) reinforces that real estate is local.

Markets that overbuilt during the boom are correcting. Markets that maintained discipline are benefiting. That pattern will continue.

Long-Term Homeowners Are Still Way Ahead

With median value growth of 67% since last purchase and only 4.1% of homes worth less than their last sale price, the vast majority of homeowners are in strong financial positions.

This isn't 2008. Homeowners aren't underwater. Foreclosures aren't spiking. Credit quality is strong. What we're seeing is healthy market rebalancing, not systemic crisis.

What to Do With This Information

Here's what I tell clients who ask me about the "53% of homes lost value" headline:

If you're a homeowner: Check when you bought and what you paid. If you bought before 2022, you almost certainly have significant equity. Short-term value fluctuations don't change that. Don't make major decisions based on Zestimate changes.

If you're buying: Focus on markets with sound fundamentals, not just where prices are falling. Understand why prices are moving in your target market. Buy when you find the right home at the right price, not based on trying to time a bottom.

If you're selling: Price based on current market reality, not peak values or what you think your home should be worth. Understand your market's specific dynamics. Accept that if you're in a cooling market, aggressive pricing gets results.

For everyone: Stop making decisions based on national headlines. Your local market—your neighborhood, your specific property—is what matters. Work with professionals who understand your market, not just national trends.

Final Thoughts

The headline "53% of homes lost value" sounds scary. And if you don't understand the context, it should make you nervous.

But context changes everything.

This isn't a crash. It's not 2008. It's a healthy market normalization after an unprecedented boom. And for the vast majority of homeowners, it's not affecting their long-term financial position at all.

Home values fluctuate. That's normal. What matters is understanding your specific situation: When did you buy? How much equity do you have? What are the fundamentals in your market? What are your plans for the home?

If you're sitting on 67% equity growth like the median homeowner, a 5% drop from peak isn't a crisis. It's noise.

If you're buying in a cooling market with sound fundamentals, some price correction creates opportunity.

If you're selling, understanding your market's specific dynamics and pricing accordingly is more important than ever.

The people who navigate this market well will be the ones who understand what's actually happening rather than reacting to headlines. They'll make decisions based on their real situation, not fear or hype.

If you want to talk through what the current market means for your specific situation—whether you're worried about your home's value, considering buying, or thinking about selling—let's have that conversation. No pressure. No sales pitch. Just clarity about what the numbers actually show and what makes sense for you.

Because 53% is a number. But your situation is unique. And unique situations require specific analysis, not generic reactions to headlines.

Worried about your home's value? Want to understand what it means for your situation? Let's discuss your specific market