Nation Might "Flirt" with Triple-Dip in Home Values

by devteam October 7th, 2011 | Share

Home price are continued their slow recovery from the double diprnexperienced in late 2010 and early 2011, but recent price performance indicatesrnthe market may be “flirting” with a possible triple-dip by early 2012.  The Home Data IndexTM (HDI) for October whichrnwas released Thursday by Clear Capital shows a continued quarter-to-quarterrnsoftening of home price gains.  Using arnrolling average, prices in the current report increased by 3.5 percent comparedrnto a 4.0 percent increase reported in September.  On a rolling average basis, year-over-year pricesrnhave declined 3.8 percent.</p

As the nation enters the winter months, always a slower period for realrnestate sales, the HDI forecast models indicate an additional decline of 1.6rnpercent in U.S. home prices by year’s end. If this prediction holds, it willrnmean a 1.0 percent decline for 2011 and a 1.4 percent gain since the first diprnin 2009.  “Barring any new shocks to thernmarket, these modest price movements are anticipated to continue with littlernreason to expect big gains or losses through the next couple of years,” thernreport states.</p

Under the above scenario, the report anticipates that home prices willrncontinue their modest slide with additional declines through the first quarterrnof next year resulting in a national price change of -3.2 percent over the nextrnsix months.   National prices may still see a positivernyearly change since that rate of decline is much shallower than the 7.7 percentrndecline over the same period one year earlier. rnHowever, if the economy does fall into recession again, “there is strongrnpotential for a triple-dip in the housing market.”  Still, the Clear Capital report says, sincernthe first dip in home prices occurred in the winter of 2009 and the double-diprnin the winter of 2010, “a dreaded ‘triple-dip’ is likely only to be flirtedrnwith, assuming there is not a major shock to the system in upcoming months.</p


One positive factor noted in the report was that distressed sales appearrnto have a diminishing role in the housing market, accounting for only one inrnfour sales (25.3 percent.)  This is arndrop of 9.2 percentage points since May and 15.6 points since the peak in Q1rn2009.</p

Despite the strong rebound that began at the end of the double dip inrnJanuary, the overall housing market remains in a tenuous state with positivernforces such as record low interest rates and a huge selection of available homes,rnand negative forces like continued unemployment and the downward pressure of distressedrnsales cancelling each other out.  “Thernnet effect of these counter forces places the housing market in a suspendedrnstate with price movement limited to a standard seasonal ebb and flow.”</p


Regionally the picture is somewhat uneven.  The Midwest showed the strongest growth withrnan increase of 7.2 percent from the first quarter of 2011 to the second.  Year-over-year price change was -4.9rnpercent.  Out of 50 markets covered byrnthe HDI, seven of the highest performing are in the region.  The report names Cleveland as the highest performingrnmarket with growth during the quarter of 18.2 percent.  Of the 15 top performing markets only threernhad REO saturation above the national average of 25.3 percent.</p


The worst performance was turned in by the West where prices gained arnmere 0.3 percent over the quarter-to-quarter period and lost 6.1 percent yearrnover year.  Eleven of the 15 lowestrnperforming markets are in the region including the worst, long suffering LasrnVegas with quarter-over-quarter prices changes of -1.7 percent, year-over-year changesrnof -10.6 percent and REO saturation of 46.7 percent.  All but four of the worst performing marketsrnhad REO saturations above the national average.</p


Both the Northeast and the South had positive quarter-over-quarterrnnumbers – 3.5 percent and 3.2 percent respectively.  On the year-over-year basis the Northeast wasrndown 0.9 percent and the South posted a decrease of 3.2 percent.</p

The HDI report is derived from the most recent information available fromrnrecorder/assessor officers and the company’s proprietary streaming marketrndata.  It reflects nationwide sales datarnincluding equally-weighted distressed bank owned sales.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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