While some analysts speculate that the worst is over for the US housing market, new data suggests that a few cities are not that lucky. Just as equity investors worry about a "double-dip" in US stocks, several housing markets are already beginning to resemble this troublesome pattern of peaks and troughs.
Real estate website Zillow.comhas run an analysis of month-by-month changes in home prices and has identified 12 metropolitan areas that show a pattern of decline following a sustained period of recovery over the past year. With value declines occurring in some places as early as 2006, some markets saw stable or increasing prices for as much as 8 consecutive months, only to have prices drop in the following months.
Zillow suggests that the price declines are driven mostly by foreclosures, increasing mortgage rates and an imbalance of supply and demand. Zillow expects that values will continue their current downward trend in these areas through the second quarter of 2010.*
The situation is perpetuated by high unemployment, as well as high negative home equity and Zillow says it's possible to see a total peak-to-trough decline of 25%. Zillow has also included a "Double-Dip Watchlist" of 10 cities that are in danger of a double dip, but are not there yet, including Boston, Denver, Tallahassee, and Cape Cod, among others.
So, which US metro areas are seeing a double-dip in home prices? Click ahead for the list.
By Paul Toscano
Posted 25 March 2010
*The last month included in the analysis is January 2010.