Why Your Home Equity Still Gives You a Huge Advantage in Today’s Market

If you’ve been seeing headlines about home prices softening, it’s natural to wonder whether your own home value may be slipping too. The truth? Even with recent moderation in some areas, most homeowners are still far ahead—and equity is the reason.

Let’s break down what’s really happening and why your financial position as a homeowner remains incredibly strong.

Home Equity and Home Prices: How They Move Together

Your home equity naturally reflects what’s happening with prices in your market. When prices go up, equity grows. When prices cool off, equity growth slows too. But “slowing” is not the same as “losing.”

After the extraordinary price surge in 2020 and 2021 — driven by record-low inventory and intense buyer demand — the market simply couldn’t keep climbing at that same pace forever. More homes have come onto the market this year, moderating price growth.

This shift is standard, and it’s healthy. And here’s the key: moderation does not erase the massive equity gains homeowners earned over the past several years.

Putting Today’s Market Into Context

Even with slight dips in a few metros, homeowners nationally have built tremendous equity since before the pandemic. Consider this:

• Home prices have increased approximately 45% nationwide since March 2020, according to Zillow.
• In markets where prices are declining, the average drop is around –4% — a slight dip compared to years of significant growth.
• FHFA data confirms that all 50 states have seen home price appreciation over the last five years.

This means that whether your local market is rising slowly, staying steady, or cooling slightly, most homeowners who bought before or during the early pandemic years are still benefiting from remarkable equity growth.

Why This Matters if You’re Thinking About Selling

If you’re considering a move — whether downsizing, relocating, or moving up to a larger home — your equity is one of your most significant financial advantages.

You can use it to:

• Cover a substantial portion (or all) of your next down payment
• Reduce your monthly mortgage payment
• Strengthen your financial position when buying in a competitive market
• Build long-term wealth through real estate

Even if price trends shift slightly in the coming months, experts don’t expect the kind of significant declines that would significantly impact consumer equity. As Realtor.com’s Senior Economist Jake Krimmel 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.”

A Market Finding Its Balance — Not a Market in Trouble

What we’re seeing now is a more sustainable, balanced real estate landscape. After years of record-breaking appreciation, this adjustment is expected — and healthy.

Most homeowners are still sitting on near-record levels of equity, which gives you flexibility and security, even in a shifting market.

Bottom Line

Homeowners today are still in an exceptionally strong position thanks to years of rising home prices and significant equity gains.

If you need guidance or want to understand your options, don’t hesitate to contact me. I’m here to help you make the best move.

Adapted from KCM