It looks increasingly more likely that the country may experience the dreaded "double-dip" in housing prices according to the S&P/Case-Shiller Home Price Indices released today.  The indices reflect data through November and show a deceleration in the annual growth of home prices nationally and in 17 of the 20 metropolitan statistical areas (MSAs) that create its indices.

S&P/Case-Shiller analyzes its national sample of 20 MSAs individually and uses them to construct a 10- and a 20-City Composite Index.  Both indices fell in November from October levels by 0.4 percent and 1.6 percent respectively and prices fell in 19 of the MSAs; only San Diego eked out a negligible 0.1 percent gain.   

The report states that "since May 2010, the housing market has experienced an unambiguous deceleration in home price returns."  The 10-City Composite has reentered negative territory with a -0.4 percent annual growth rate in November compared to a +5.4 percent rate reported in May.  The 20-City Composite fell 1.6 percent in November compared to a 4.6 percent growth rate in May.

Only four cities, Los Angeles, San Diego, San Francisco, and Washington, DC showed a year-over-year gain while eight markets, Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland Oregon; Seattle, and Tampa hit new lows, falling below the "trough" levels set in the spring of 2009.

David M. Blitzer, Chairman of the Index Committee at Standard and Poor's said, "With these numbers more analysts will be calling for a double-dip in home prices."  He defined a double dip as seeing both the 10- and 20-City Composites set new lows after the peak prices of 2006 and 2007.  "The series are now only 4.8 percent and 3.3 percent above their April 2009 lows, suggesting that a double-dip could be confirmed before spring.  Certainly eight cities setting new lows, and with the only positive news concentrated in southern California and Washington DC, the data point to weakness in home prices."  Even those cities where prices are increasing are seeing shrinking rates, he said.  Washington DC had an annual rate of growth of 7.7 percent in May but that number shrunk to 3.5 percent in November. San Diego, Los Angeles, and San Francisco are still ahead over the last year but their annual rates are also shrinking. 

Tracking across recent months also shows a pattern of decline.  19 cities and both Composites were down in November from October but for fourteen of these MSAs and both Composites, this was the fourth straight month of decline; thirteen MSAs and both Composites have seen seven months of decline in 2010, although not all had consecutive months.

Since the peak in housing prices, which S&P/Case-Shiller pegs for nationwide analysis at June/July 2007, house prices have declined in both the 10- and 20-City Composite Indices by 30.3 percent.  The 10-City Composite is up 4.8 percent and the 20-City up 3.3 percent from the trough reached in April 2009.

The MSA with the largest decline in November was Detroit with a -2.7 percent change followed by Atlanta (-2.5 percent) and Chicago (-2.2 percent.)   As of November, Las Vegas is down 57.2 percent from its peak in August 2006, Phoenix has lost 53.9 percent in home value since its peak in June 2006, and Miami is down 48.8 percent from December 2006.

"Location location location" said MND's Managing Editor Adam Quinones when asked whether or not he would buy a home in this market.  "Certain parts of the country are outperforming others. I would do much research on my local market after deciding on the region I wanted to live in though.  Then I would avoid areas with an accumulation of similarly structured housing units.  For example I would not purchase a townhouse or condo unless I was able to do so at a deep discount. I would be looking for a single-family home in an established neighborhoods with a proven school system.  Otherwise, the deal would have to be too sweet to pass up to get my attention.  There are opportunities to be taken advantage of, you just have to do your homework. Maybe housing consumers should have a more direct pathway to appraisers? There is no better source for unbiased perspective on local housing markets. It worked for me when I was shopping for housing. "


S&P/Case-Shiller Home Price Indices are published monthly.  They are constructed to track the price of single-family homes located in the subject MSAs and each index combines matched price pairs of thousands of individual houses for the available universe of arms-length sales data.  All data presented here is non-seasonally adjusted.