Probability of Home Value Declining in a Given Year
~20%
Annual probability in US
Historically, about 20% of years see overall home price declines in some US markets, though severe drops are much rarer.
While US home prices have generally trended upward over time (averaging about 3-5% annual appreciation nationally), individual markets can and do experience price declines. Historically, about 20% of metropolitan areas experience some year-over-year price decline in any given year, though the magnitude and breadth of declines varies enormously.
The most severe national decline was during the 2008-2012 housing crisis, when the S&P/Case-Shiller national home price index fell about 27% peak-to-trough. Some markets (Las Vegas, Phoenix, Miami) saw declines of 50% or more. In contrast, the post-pandemic housing boom saw national prices increase by about 40% between 2020 and 2023.
Factors that influence home value include local economic conditions, job growth, population changes, interest rates, housing supply, school quality, crime rates, and proximity to amenities. Individual home values can decline due to neighborhood deterioration, deferred maintenance, nearby nuisances, or environmental contamination. Maintaining a home, staying current on improvements, and purchasing in areas with strong economic fundamentals are the best protections against value decline.
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