TJ Walker discusses recent US housing market weakness: over half of American homes lost value in the prior 12 months (53% as of October), the highest share since 2012, with major regional variation (Denver 91% of homes below peak; Austin 89%; Sacramento 88%). National prices are roughly flat but southern and western markets are falling while parts of the Midwest and Northeast rise. Walker emphasizes homeowners still have substantial median equity gains (~67%) and that only a small share (4.1%) are below their last sale price. He argues against treating a primary residence as a guaranteed investment—recommending viewing homes as an expense, warning of transaction costs and career friction from ill-timed purchases.
Questions this video answers
53% (highest level since 2012).
Denver — 91% of homes below their peak.
Austin — 89%; Sacramento — 88%.
9.7% (average drop from peak).
Roughly 67% median equity gains.
Chapters
More than half of US Homes lose value. According to Yahoo Finance, more than half of all American homes have lost value over the last year. 53% of homes were down as of October, the highest level since 2012. Nationally, prices are roughly flat, but that headline number hides major regional difference. Prices are falling across much of the south and west, while while rising in many parts of the Midwest and Northeast. Denver leads the declines with 91% of homes below their peak, followed by 89% in Austin and 88% in Sacramento. Even so, Zillow's chief economist says this is the best news buyers have seen in years. Well, yeah, if you want to buy. As affordability finally begins to improve, most homeowners still remain far ahead of where they started with, with median equity gains of roughly 67%. After years of rapid price growth. What's the real message here? Pay attention to the news. More than half of all homes in America went down in value in the last 12 months. Does that mean you should never buy a house? No. But if you're buying a house because you think, wow, this is the surest way to gain wealth, you are mistaken. House prices go up and they go down. Let's dig a little bit deeper here. So this is a bit of a pet peeve of my full disclosure. I do own a house, and my pet peeve is not that housing prices went down this year. They do all the time. And nobody talks about it. You never go to a cocktail party and someone says, wow, I just did this real estate deal, I sold my house and wow, what do you know? I lost $10,000. I lost 100,000. People don't like to brag about. Everyone likes to talk about how smart they are. They doubled their money, they tripled their money. They never really factor in all expenses or what their true costs were or what their same amount of money would have done if they put it into an index fund and rented. Let's dig a little deeper into some of the facts here. It's not that housing prices are just plummeting. It's not like somebody bought a house for $2 million six months ago and you can now get it for 300,000. It's not like that. But it is going down for most Americans. I'm in that, too. Believe me. I don't want any sympathy from you. I bought a house, closed in March, I guess, really nailed down the price and everything. A little less than a year ago, I'm sure. And I haven't even checked. I don't even want to know the Value of my house has gone down. Does it matter to me? Because I was never under the illusion that housing prices go up. And I did not put significant percentage of my net worth into this house, nor do I think that's a good idea in general. Let's look at some more of the facts. Average drop from peak is 9.7%. Median homeowner equity still up roughly 67%. Only 4.1% of homes are below their last sale price. So, yeah, it went down last year, but if you bought your house four years ago, it's probably still higher than that. Why am I spending time on that? Because I do think that we live in a culture, and it happens in other countries, too, but especially in the United States, where it's beaten into you that you have to own a home or you're fiscally irresponsible. Not true. A home is the best investment you'll ever make. Simply not true. Now, it is true. If you buy a home and you're very irresponsible and you never save any money for your retirements and you have no 401k, no investments, put away, nothing in the stock market. If you have nothing else and you eventually pay off your home and you sell it, well, yeah, then it is the most significant investment you ever made because it's the only investment you ever made. If you put $10,000 into a savings account and that's all you ever did, and you got 2% a year for 50 years, you still wouldn't have a lot for retirement. But, yeah, that would be the most significant investment you ever made. I want to caution you before you leap into buying a house or can, or especially if you are so leveraged, you're buying a house much more expensive than you can really afford because you think, well, it's a sure thing. Always get your money back. Hear that again and again, not just by real estate agents, but by average people and even successful people. It's simply not true. You can definitely overpay for a house. People do it every day. Now, the average drop, as I mentioned, is 9.7%. But if you were to buy a house a year ago and Your price dropped 9.7% and then you sold your house, well, you wouldn't be losing 9.7%, you'd be losing another 6 to 10%. You could be 20% down by the time you factored in all of your closing costs and legal costs and taxes, even on losses. So this can be a big factor of all of a sudden you get your dream Job. You just bought a house in Atlanta. Now you got to move to Denver because your dream job says, hey, we love you. Here's a salary increase. You got to move here. You're going to have to move your house. Your move and sell your house. Well, you now you've potentially lost 20%. Whereas if you had rented and taken that down payment and put it in the s and P500, well, certainly in the last year, you would have made out like a bandit. You would have made a lot of money if you had done that. So I think stories like this just don't get enough attention. They are a very small blip at the bottom of a financial page. Whereas every single day, our entire culture, your parents, sometimes grandparent, every real estate agent you ever meet will say, that's never been a better time to buy. Market's way up, everybody's buying, you got to get in. Things are great. If it's an absolute recession, depression and housing prices are falling, they'll be never a better time to buy because there's so many good deals. And look, I get it. Everyone has a certain self interest and it's very hard to see the world and understand data against what has an impact on your own. So I don't expect real estate agents to give me an honest assessment of what's a good deal and when is a good time to buy, because they will say, it's always a good time to buy. My message to you is no. Quite often it's not a good time to buy, especially if you're young and your career could take you to places you don't know yet. House can actually destroy your career. Because if you think, oh, I'd love to take this great new job in Chicago, but my hands are tight because I just bought this big house and I don't want to sell it and lose $100,000. So be very careful. Get I have a house, I'm now making it into something really enjoy that's quite comfortable and a little bit of luxury. But it's not because I think this is going to make me money. But I know I would get virtually guarantee that had I continued to rent, I'd be much better off financially in the long run. I'm in a house for the quality of living. I believe everyone should view a home as an expense, not an investment. If you do end up somehow making money, consider that found money. Consider yourself lucky. Do not consider that something that you're entitled to or is just the norm.
