New Homeowners Lose $122,000 as Housing Prices Drop

New homeowners across the U.S. are confronting a rapid depreciation in their home values.

With recent data showing an average loss of $122,000 in home value in some areas, the American Dream is showing signs of wear.

The past year has seen the American housing market shift, and property values are now in "freefall," according to a November study issued by Point2Homes. Owners who battled historic mortgage rates to purchase their homes are now facing a market in retreat as single-family homes shed up to $223 daily in value.

In 2022, a wave of over 5 million homes were sold in the U.S., with a quarter of the purchases made by first-time buyers, according to a report from the National Association of Realtors.

Some of those new entrants to homeownership now find themselves underwater as the market value of their homes recedes.

Fifteen large markets in the U.S. were most affected on a year-over-year basis, according to Point2, for both single-family homes and condos. Single-family homes in Memphis, Tennessee, saw drawdowns of 17.1 percent, while homes in Chandler, Arizona, saw a more modest loss at 0.6 percent, but still ranked in the most affected category. The ripple effect of the losses is potent enough to threaten homeowners with negative equity, the report said, a precarious financial position that turns the asset of home ownership into a liability.

Newsweek has reached out to Point2 via email for comment.

It's not just those 15 markets that were hit. Looking at the top 100 markets in the U.S., Point2 analysts charted smaller year-over-year price drops that deflated values in 36 cities for condo owners and 25 for those with single-family homes. By dollar amount, the analysts said that deflation is most evident in San Francisco, where condos lost $122,500 in value over the last year, a number that echoes the city's median income of $126,187.

Markets that once seemed immune are buckling as well. New York City's boroughs, long touted for their resilience, are seeing value slip in both condos and single-family homes. In Manhattan, condo owners face the prospect of selling for nearly $70,000 less than last year's purchase price, and in the Bronx, homeowners would sell for nearly $40,000 less than last year's purchase price.

However, for those looking to buy a home, now may be a good time, Hannah Jones, an economic research analyst at realtor.com, previously told Newsweek. The economist said that with mortgage rates moderating over the last few months coupled with falling prices, buyers who have waited to enter the market have a "good opportunity" to buy before the end of the year.