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Potomac Wealth Advisors president and founder Mark Avallone says the ‘trickle down’ effect will take hold later this year.

The U.S. housing market suffered the biggest drop in value since 2008 as home prices came crashing down.

That's according to a new report from real estate brokerage firm Redfin, which showed that the total value of U.S. homes tumbled from a record high of $47.7 trillion in June 2022 to $45.3 trillion at the end of the year — a decline of $2.3 trillion, or 4.9%. 

It marks the biggest drop in percentage terms since the 2008 financial crisis, when home values plunged by 5.8% from June to December.

During the COVID-19 pandemic, home prices soared at a pace not seen since the 1970s with mortgage rates near a record low. Homebuyers — flush with stimulus cash and eager for more space during the pandemic — flocked to the suburbs.

Demand was so strong, and inventory so low, that at the height of the market some buyers waived home inspections and appraisals or paid hundreds of thousands over asking price.

WHEN WILL US HOME PRICES FINALLY STOP DROPPING?

Homebuyers flush with stimulus cash and eager for more space during the pandemic flocked to the suburbs. (David Paul Morris/Bloomberg via Getty Images / Getty Images)

The frenzy came to a halt when the Federal Reserve embarked on the most aggressive interest-rate hike campaign since the 1980s as it tried to slow the economy and crush runaway inflation. 

The interest rate-sensitive housing market has so far borne the brunt of tighter monetary policy: Although mortgage rates have fallen from a peak of 7.08% notched in November, they have recently reversed that trend and started to march higher amid interest rate-hike fears. The average rate for a 30-year fixed mortgage climbed to 6.5% this week, according to data from mortgage lender Freddie Mac. 

That remains significantly higher than just one year ago, when rates hovered around 3.92%.

The median price of a home sold in January was $383,249, down 11.5% from a peak of $433,133 in May 2022, according to Redfin. (Jim Watson/AFP via Getty Images) / Getty Images)

Homebuyer demand dried up as consumers confronted the steepest mortgage rates in years, further weighing on home prices. The median price of a home sold in January was $383,249, down 11.5% from a peak of $433,133 in May, according to Redfin. 

"The housing market has shed some of its value, but most homeowners will still reap big rewards from the pandemic housing boom," said Chen Zhao, Redfin economics research lead. She noted the total value of U.S. homes remains roughly $13 trillion higher than in February 2020, before the COVID-19 pandemic shut down broad swaths of the global economy. 

Still, even with higher mortgage rates putting home ownership out of reach for millions of Americans, many home prices are still more expensive than they were one year ago. In December, the total value of U.S. houses was still up 6.5% from the same time one year ago. 

GET FOX BUSINESS ON THE GO BY CLICKING HERE close video US economy in a unique period for housing sector: Michael Kantrowitz

Piper Sandler chief investment strategist Michael Kantrowitz shares his 2023 market outlook ahead of the January inflation data after futures data signals a continued rally.

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Springer out after 3rd base hop, ending Jays’ rally

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Springer out after 3rd base hop, ending Jays' rally

TORONTO — Blue Jays outfielder George Springer skipped into third base on a key RBI hit by teammate Alejandro Kirk, and hopped right into an inning-ending out in the fifth on Sunday against the Athletics.

Springer was called out following a replay review after Athletics third baseman Max Schuemann alertly kept his glove on the Blue Jays right fielder while Springer hopped up and down on third base.

Springer, who had reached on an RBI single that opened the scoring for Toronto, was celebrating Kirk’s double that cut the deficit to 3-2.

The out call meant Toronto slugger Addison Barger didn’t get to bat with runners at second and third.

Schuemann had just entered the game as a defensive replacement, taking over for Miguel Andujar.

The Athletics had lost five straight and 16 of 17 entering Sunday.

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Ukraine’s drone attack in Russia shows Kyiv felt it had nothing to lose

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Ukraine's drone attack in Russia shows Kyiv felt it had nothing to lose

An audacious Ukrainian drone attack against multiple airbases across Russia is a humiliating security breach for Vladimir Putin that will doubtless trigger a furious response.

Pro-Kremlin bloggers have described the drone assault – which Ukrainian security sources said hit more than 40 Russian warplanes – as “Russia’s Pearl Harbor” in reference to the Japanese attack against the US in 1941 that prompted Washington to enter the Second World War.

Ukraine war latest: Russia accuses Kyiv of ‘terrorist attack’

The Ukrainian operation – which used small drones smuggled into Russia, hidden in mobile sheds and launched off the back of trucks – also demonstrated how technology and imagination have transformed the battlefield, enabling Ukraine to seriously hurt its far more powerful opponent.

Moscow will have to retaliate, with speculation already appearing online about whether President Putin will again threaten the use of nuclear weapons.

“We hope that the response will be the same as the US response to the attack on their Pearl Harbor or even harsher,” military blogger Roman Alekhin wrote on his Telegram channel.

Codenamed ‘Spider’s Web’, the mission on Sunday was the culmination of one and a half years of planning, according to a security source.

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In that time, Ukraine’s secret service smuggled first-person view (FPV) drones into Russia, sources with knowledge of the operation said.

Flat-pack, garden-office style sheds were also secretly transported into the country.

The drones were hidden in truck containers and the tops remotely lifted for the drones to be flown out to attack. Pic: SBU Security Service
Image:
The drones were hidden in truck containers. Pic: SBU Security Service

The oblong sheds were then built and drones were hidden inside, before the containers were put on the back of trucks and driven to within range of their respective targets.

At a chosen time, doors on the roofs of the huts were opened remotely and the drones were flown out. Each was armed with a bomb that was flown into the airfields, with videos released by the security service that purportedly showed them blasting into Russian aircraft.

These drones were used to destroy Russian bomber aircraft. Pic: SBU Security Service
Image:
These drones were used to destroy Russian bomber aircraft. Pic: SBU Security Service

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Among the targets were Tu-95 and Tu-22 bomber aircraft that can launch cruise missiles, according to the Ukrainian side. An A-50 airborne early warning aircraft was also allegedly hit. This is a valuable platform that is used to command and control operations.

The use of such simple technology to destroy multi-million-pound aircraft will be watched with concern by governments around the world.

Suddenly, every single military base, airfield and warship will appear that little bit more vulnerable if any truck nearby could be loaded with killer drones.

Read more:
Russia investigates bridge collapses
What new Stalin statue says about Putin’s regime

The most immediate focus, though, will be on how Mr Putin responds.

Previous attacks by Ukraine inside Russia have triggered retaliatory strikes and increasingly threatening rhetoric from the Kremlin.

But this latest operation is one of the biggest and most significant, and comes on the eve of a new round of peace talks between Moscow and Kyiv that are meant to take place in Turkey. It is not clear if that will still happen.

US President Donald Trump has been pushing for the two sides to make peace but Russia has only escalated its war.

Ukraine clearly felt it had nothing to lose but to also go on the attack.

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Phils moving Walker to relief in bullpen shakeup

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Phils moving Walker to relief in bullpen shakeup

PHILADELPHIA — The Phillies made moves to restructure their bullpen Sunday, removing Taijuan Walker from the rotation and recalling right-handed reliever Seth Johnson before their series finale against the Milwaukee Brewers.

Mick Abel will take Walker’s place in the starting rotation Thursday in Toronto. Reliever Jose Ruiz was designated for assignment to clear a roster spot for Johnson.

“I think Tai’s got a chance to make us a lot better coming out of the ‘pen,” manager Rob Thomson said.

Walker has made 10 appearances, including eight starts and two long relief appearances, with a 2-4 record and 3.53 ERA in 43⅓ innings. Thomson will use Walker in one-inning roles.

The 32-year-old Walker has been primarily a starter throughout his 13-year career. He is in the third year of a $72 million, four-year contract.

Abel made his major league debut on May 18, throwing six scoreless innings. The 23-year-old was the No. 15 pick in the 2020 amateur draft.

Johnson, 26, is 2-2 with a 4.91 ERA and 42 strikeouts in 33 innings with Triple-A Lehigh Valley, transitioning from the starting rotation to a relief role. He made one appearance for the Phillies last year, allowing nine earned runs in 2⅓ innings on Sept. 8 against Miami.

Johnson was acquired by the Phillies from Baltimore on July 30, 2024, in a trade for Gregory Soto.

Ruiz had an 8.16 ERA in 14⅓ innings this season, including allowing five runs in one inning of Saturday’s 17-7 loss to the Brewers. The 30-year-old right-hander had a 5-1 record and 3.71 ERA in 52 appearances in 2024.

The Associated Press contributed to this report.

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