H
ome equity values have taken a hit in the US, with the average homeowner losing around $4,200 in the past year, according to a recent report from Cotality. The slowdown in the housing market is starting to affect overall home equity, with some states experiencing significant losses while others see gains.

    The share of homeowners with negative equity has been rising each quarter since last year, but remains below pre-pandemic levels at around 2.1%. However, a small drop in home prices could quickly push more than 250,000 homeowners into negative equity, while a 5% increase could help around 150,000 regain their equity.

    Regional differences are significant, with some states experiencing substantial losses. Hawaii saw the biggest drop, with an average homeowner losing $65,900 in equity over the past year. Washington D.C. and Florida followed closely behind. In contrast, Rhode Island homeowners had the largest gain at $36,500, while New Jersey came close with a gain of $35,700.

    Cotality's chief economist, Selma Hepp, notes that geographical differences are key, as weakening markets in the South are pulling down the national average. Rising insurance and taxes, combined with an increased risk of natural disasters, may lead to further declines in these areas.