If you’ve noticed headlines about home prices softening, you might be wondering what that means for your home’s value. The good news: even with slight dips in some markets, most homeowners are still in a great position—thanks to home equity.
How Home Prices and Equity Work Together
Home equity rises and falls alongside home prices. When prices go up, your equity grows. When prices cool, equity growth simply slows—not disappears.
After the rapid surge in home values during 2020 and 2021, a bit of a cooldown was bound to happen. With record-low inventory and high buyer demand, home prices—and equity—skyrocketed. But that level of growth wasn’t sustainable forever.
As more homes have hit the market this year, price growth has eased a bit. That’s a sign of a normalizing market, not a declining one. And importantly, it doesn’t mean you’ve lost ground.
Putting Things Into Perspective
Most homeowners today still have significantly more equity than they did just a few years ago. That’s a major advantage if you’re thinking about selling or making your next move.
According to Zillow, home prices nationwide have risen roughly 45% since March 2020. Even in markets seeing small declines—averaging around -4%—those drops barely make a dent compared to the tremendous gains over the past five years.
In other words, a little cooling can’t undo years of growth. Homeowners who have owned their homes for several years remain well ahead—and that’s true across nearly every state.
Data from the Federal Housing Finance Agency (FHFA) shows that home prices have increased in every single state over the past five years. That means homeowners everywhere are sitting on much more equity than before the pandemic.
If you’ve owned your home for a while, you’ve likely built substantial equity—equity that can open doors for your next chapter, whether that’s moving up, downsizing, or investing elsewhere.
What Experts Are Saying
Worried that prices could fall further? Jake Krimmel, Senior Economist at Realtor.com, explains:
“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.”
This moderation isn’t bad news—it’s a sign that the housing market is finding its balance again after several years of record-breaking appreciation.
The Bottom Line
Even with modest price adjustments in some areas, homeowners today still hold near-record levels of equity.
If you’re curious about how much equity you’ve gained—or how much your home might be worth in today’s market—connect with an Agent. You may be pleasantly surprised by just how far ahead you really are.
