Last month, we reported in our Q4 Real Estate Market Reports that five of the 143 markets we covered were in the throes of a “double dip,” meaning home values showed sustained monthly increases sometime during the year, but have been falling again, for at least five months in a row, on a month-over-month basis.

Some additional markets were on the double-dip watch list. Home values, measured by the Zillow Home Value Index, were falling after earlier increases, but the falls hadn’t yet gone on long enough to constitute a real trend.

One month later, and 12 markets have made it onto the official double-dip list. The Providence, R.I. and Boulder, Colo. metropolitan statistical areas (MSAs) are among them.

The watch list has shrunk a bit, as many markets that were on it last month sunk firmly into double dip territory after January. Ten markets, including the Boston and Denver MSAs, seem poised for a double dip. Here’s the full list:

On the other side of the coin are 16 markets that continue to show monthly increases. But for some of these, there is a caveat. Markets like the San Francisco MSA, while seeing month-over-month increases, are also seeing the rate of increase slow. If that continues, home value changes could tip back into negative territory, making some additional MSAs candidates for the double dip.

But for homeowners who live in a double-dip market, don’t lose heart. The double dip is nothing more than the continuation of an inevitable market correction. It’s not a new downturn, just the end of the one most markets have been experiencing since 2006. As Zillow Chief Economist Dr. Stan Humphries explained in his blog post last month, the bottom is in sight for most markets across the country, although we expect it will be several years before values begin to show substantial increases again.

One quick note on how we define double-dip markets: Not only do the monthly increases and decreases have to be sustained (the first downturn has to last for at least 10 of 12 months, and the upturn and subsequent downturn have to last for at least five months), they also have to total an annualized change of at least 1 percent.

  • DebtFree

    We are in one long, continuous dip with minor blips on the way down to the bottom.

    For many it’s very difficult to get past the “real estate is a good investment” and “things will pick up next year” mindset. That mindset was realistic for the 80 years prior to this last housing bubble, which was VERY different than previous real estate boom/bust cycles.

    In fact, by 2006 housing prices had become so far detached from reality (due to now-gone exotic loans: 0% down loans, teaser rate ARMs, interest only loans, neg am loans, etc, etc) while incomes remained flat to declining. As such, the only inevitable course of action for housing prices today is a reversion to the mean, where home prices return to their historic norms, as supported by INCOME:

    Consider a house on the market in 2002-2006: buyers didn’t care if the house was a good fit (number of bedrooms, location, etc), because they could theoretically live there only 2-3 years and sell it for $100,000+ profit. Rinse and repeat every 2-3 years. They could also “buy” said house with zero money down, with little savings in the bank, and further, while living there could extract equity from the house to finance their lifestyle (install granite counters, buy flat screen TVs, buy new cars, even make payments on the original mortgage!!). It all worked like magic, and drove the US economy — until reality hit in 2006-2007.

    Fast forward to today: now buyers may have to live in a house 10 or more years, so it matters if there are too few bedrooms, or there is no room to expand. Now buyers need 20% down payments, and it actually matters if the house’s value will decline, and eat up that 20% down payment. And job loss? Before, since buyers were putting $0 at risk, they could not only bid up prices to overpay for houses, they could walk away in a foreclosure without losing any money (only the lender’s money). But if you have a 20% down payment into a house, you’re not likely to walk away without deep, deep hesitation.

    In short, home prices will decline ANOTHER 20-30% because the market and buyer pool that existed in 2002-2006 simply no longer exists, and its existence almost brought down the whole country a la The Great Depression (and we’re still not out of the woods yet on that front).

  • Dallas Texas Homes for Sale

    Texas is looking good. We dont have any fears of a double dip

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  • az real estate

    Id like to see the index for the MSA’s that haven’t yet experienced a double dip due to continuous decline. I suspect conflating the two would give a much more dire (and accurate?) picture of markets nationwide.

  • epobirs

    Ah, the power of government meddling, destroying stuff previously thought indestructible.

    The creation of Freddie Mac and Fannie Mae, along with other interventions in the market, has done more damage to real estate value than every hurricane, tornado, flood, and earthquake striking this country in my lifetime. Combined. All without ruining the actual structures. A remarkable feat achieved through the power of ham-fisted government intervention for the purpose of ‘helping people.’



  • Andrew

    BofA is writing down principal because they have too! Recently, the executives at BofA made a remarkable discovery, (no not the tire swing in the executive washroom) they discovered a computational tool known as the number line. With it, they are able to decide at what price they should sell an asset and maximize their return.

    With this new tool, these BofA executives were able to reason out that the average ROI on a Foreclosure was about 37% of the original balance. With Shortsales is was about 60%, and if they wrote down the principal, (which they were unlikely to receive anyway) they would simultaneously increase cash-flow to the bank, maintain customers in their homes, aid in stabilizing local real estate markets, and eventually begin to increase the value of real estate by decreasing the supply of REOs.

    The value increase would only be slowed until the absorption of the remaining ‘shadow inventory’ that has allegedly been stockpiled by many financial institutions prior to the discovery of this new tool called the number line.

    That said, I understand these same BofA executives are experimenting with another new technology called “Fire”.

  • James Mucci – Michigan Refinancing

    I don’t see any Michigan MSA’s, I wonder… Maybe our national high unemployment rate has something to do with it.

    I wonder if Zillow thinks we have already seen our bottom, or are just not close to the bottom yet.

    I am happy to see the principal reduction talk in the news again, however we need to give the big banks more incentive to reduce principal.

    James Mucci – Michigan refinancing

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  • http://www.houstontxmortgagelender.com0dd Brad Notter

    Thanks for the great post. This information is supported by the Case Shiller Future Prices Index. I’m still concerned about the withdrawal of Government sponsored programs in the Housing industry that may have a greater affect on prices in the not so distant future.

    Houston TX Mortgage

  • Fort Collins Homes for Sale

    Jeeze. What is the deal with Colorado homes being on the list so much???? Is it just because we typically have a lot of growth and development?

    Homes for Sale in Fort Collins

  • dkstar

    It really boils down to employment at this point. Watch the unemployment numbers and see how they trend with housing prices. That’s why Texas is doing just fine. If people don’t have jobs, they aren’t buying homes or moving to take the “new job”. Since we are experiencing the largect negative home equity numbers since the great depression – the only way out of this mess is inflation. Yes you heard me correctly. And just maybe that is the government’s secret plan behind the spend-spend-spending that is going on with our federal funds. If we increase inflation by 30% – that in effect turns around the negative home equity numbers for those of us who are still property owners. Simple as pie.

  • Katie Curnutte

    az real estate and James —
    You can actually check out data all markets here:
    As for whether we’ve hit bottom, we don’t think we’re quite there, nationally. Our chief economist, Stan Humphries, forecasts the national bottom in Q2 of this year, and expects it will be years (3-5) of bouncing around at near-0 appreciation before we see any real recovery.
    Of course, this will vary by market.
    Fort Collins Homes for Sale — I think Colo. and Mass. are in similar situations. I used to live in Boston, so I pay particularly close attention, and a quick look at showed me the similarities between the two states. Markets in both did so great last year (values in many are still positive on a year-over-year basis), that they were prime candidates for a double dip. There are lots of markets out there that never saw positive appreciation, even at the peak of last fall’s increased sales, so it could be that Colo. will come out of this in better shape than many others in the country.

  • DebtFree

    dkstar, how does 30% inflation look when matched with flat wages?

  • karen

    Why would Zillow mention Providence front and center in its news release when by its own admission, the RI market only scores two out of four stars in its Zestimate Accuracy Chart which shows the accuracy of Zillow valuations in each market?

  • Broomfield Homes

    I agree “Fort Collins”. What is going on in Colorado? I have heard that Colorado is experiencing some type of delay with the economic conditions, so maybe its just that things weren’t too bad before when they were bad for most everyone else, and now it is hitting us harder when others have already taken the hard hit.

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  • Doral McVey

    It’s going to be three dips and the last one will last 15-20 years, if we’re lucky and play it smart.

    The US has been de-industrializing itself faster than any nation in history.

    You can’t invent a new industrial base – please don’t tell me about the Internet – in an instant when you’ve chewed up and spat out the last one that took 200 years to construct.

    It would be smart for everyone to plant potatoes and took look warily at guys selling real estate who are ready to tell you prices are going to double and triple in a year or so and only a fool wouldn’t be throwing ever last dime into it.

    Likely, the slow slide down will continue for another 6-8 years.

  • Maureen McCabe

    With the current brouhaha over the Forbes writer misinterpreting Zillow’s information and the focus in Denver turning to “Zillow’s info stinks” when someone posted a comment on one of the posts about CBS picking up on this I had to go read it to see if they picked up a Zillow report or if they were trying to use Zillow data to say it says something it just does not say.

    Where does the definition of what a double dip is come from? Is this a definition that’s been around that I’d find in an economics book?

    Is the Zillow Home Change Value Index all homes in a market? Or just the homes that Zillow has on their site?

  • Katie Curnutte

    Hi Maureen,

    Katie from Zillow here.

    I’m happy to answer your questions.

    To my knowledge, there is no widely accepted economic definition of a double dip. When we first noticed this trend, in Q4 2009, it appeared that many markets had trends that could be called a “double dip,” in that home values that had previously been declining rose somewhat in 2009 before beginning to fall again several months later. However, we wanted to make sure we had strict criteria before calling out the markets that were seeing a true double dip.

    We needed to be sure that the trends were sustained; that is, markets needed to be in a steady downturn to begin with — we did not want to call out markets that had spent the last several years with home values fluctuating up and down. So we ruled out any markets that did not have negative month-over-month change in home values for 10 out of the past 12 months.

    Next, we wanted to make sure the subsequent increase in values was substantial and long enough to be considered a trend. So we eliminated any markets that did not have at least five months of month-over-month increases in home values. Those increases also needed to total at least 1% annualized.

    We applied similar criteria for the subsequent decrease in values — to be a double-dip market, home values had to have fallen for at least five consecutive months, and total a change of at least 1% annualized.

    As far as the Zillow Home Value Index, it is the median value of all homes in an area. We do not calculate it in areas where we don’t have enough data, but those areas are few and far between. We have data on 95 million homes across the country, and Zestimates for nearly 70 million.

    Karen — Regarding your comment about the accuracy of the Zillow Home Value Index: It’s important to understand that there is a difference between accuracy of individual Zestimates (which we surface on our site, down to the county level) and the Index. Zestimate accuracy is unbiased, meaning individual Zestimates are as likely to be low as they are high. Therefore, when we look at the median of all Zestimates, it is a very accurate representation of what is happening to home values in an area. We test this continuously.

  • House Sales

    This site is a very good for house sales


    celina george



  • matts

    sometimes i want to believe, sometimes i don’t even want to think about it… the veracity of a claim must be supported by substantial proof that indeed the fact is true.
    home improvement fort collins

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