Zillow Warns on Double Dip in House Prices

There are signs that the feared “double-dip” in house prices may have taken hold of US housing prices in as many as one in five major housing markets, according to data compiled by Zillow, a real estate sales and data services provider. While some individual markets have experienced a bottoming out and increase in prices, 29 of the 143 markets Zillow tracks is now showing signs of a possible double dip in home values. In those markets, home values have flattened or have begun to decrease again after showing at least five consecutive monthly increases during 2009 — what Zillow called early signs of what could a double dip. The Zillow Home Value Index put the national median price at $186,200 in Q409, a 5% decrease from Q408. Compared to Q309, prices declined 0.5% during the last quarter of 2009. The index is a measure of median home values of all single-family residences, condominiums and cooperatives, both on the market and not for sale. Q409 marked the 12th consecutive quarter of year-over-year declines, Zillow said. “The good news is that, for those markets that will see a double dip in home values before reaching a definitive bottom, this second dip will not be a return to the magnitude of depreciation seen earlier, but rather will look more like a modest aftershock of the earlier downturn,” said Zillow chief economist Stan Humphries. Some of the largest markets at risk of a double-dip include Boston, Atlanta and San Diego, Zillow said. However, values in 29 other markets, including Los Angeles and New York increased month-over-month for every quarter in Q409. Zillow warned however, that in December, the increases slowed and warned many markets could experience several months of sustained decline in early 2010. Zillow added home values increased year-over-year in 27 of 143 markets and remained flat in 15. “While we have seen strong stabilization in home values during 2009, there are clear signs that they will turn more negative in the near-term,” Humphries said. “What we saw in mid-2009 was a brief respite from a larger market correction that has not yet run its course.” The rate of borrowers with negative equity — where the value of their property was greater than the remaining balance on their mortgage — was 21.4% in Q409, up slightly from 21% in Q309. But foreclosures continue to mount, as the number of homeowners that lost their home — one out of every 1,000 properties — reached a new high in Zillow’s tracking data that dates back to 2000. Foreclosure resales accounted for 20.3% of all US home sales in December, lead by Merced, Calif., where foreclosure resales took a 68.3% share of the market, Las Vegas (64%), and the Modesto, Calif. (62%). Zillow’s interactive home value report is available online. Write to Austin Kilgore.