February 22, 2010 If you own a home and hope to sell it this year, it might be wise to hold off for a year or two. Despite persistent glimmers of hope in the housing market, prices may remain soft in 2010.
Online real estate marketplace Zillow.com reports 2009 ended with the small amount of market momentum built up during the year flowing out of the market.
Of the 143 metropolitan markets the company monitors, it found potential trouble in one in five, where it says a "double dip" in home values is a strong possibility in early 2010.
Markets already in a double dip price-wise include Augusta, Ga.; Greeley, Colo.; Harrisburg, Pa.; Lancaster, Pa.; and Oklahoma City, Okla.
Home values in an additional 29 markets, including the Los Angeles and New York MSAs, increased on a month-over-month basis each month throughout the fourth quarter. However, the rate of increase slowed from November to December in 21 of those markets, and several appear likely to experience several months of sustained decline in early 2010.
Negative Equity
Negative equity remains high at 21.4 percent of all single family homes with mortgages, but was relatively flat quarter-over-quarter, the site said.
U.S. home values fell five percent year-over-year, and declined 0.5 percent quarter-over-quarter, marking the 12th consecutive quarter of year-over-year declines. One in five, or 29 of the 143 markets tracked by Zillow, show signs of a "double dip," defined as at least five consecutive month-over-month increases in home values during 2009 before beginning to fall again in the second part of the year.
"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," said Zillow Chief Economist Stan Humphries. "What we saw in mid-2009 was a brief respite from a larger market correction that has not yet run its course. 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."
Zillow attributes much of 2009's market strength to a first time home buyer tax credit, which has been expanded and extended throughout the first half of 2010. That credit, the company says, might not be enough to sustain sales - and prices - as the months go by.
