Significant Depreciation Jumps from 6 percent to 24 percent of Homes in 12 Months

Aug 20, 2015, 08:00 ET from Weiss Residential Research LLC

NATICK, Mass., Aug. 20, 2015 /PRNewswire-USNewswire/ -- Though rising median home prices paint a favorable picture of current housing markets, the population of houses losing over 2 percent of value per year has increased to 24 percent from just 6 percent a year ago in ten of the nation's largest markets.

According to June data, in three major urban markets--New York City, Washington DC and Chicago--more than a third of homes are losing over 2 percent of value on an annualized basis.  In New York City nearly half, 45 percent, of homes are losing value at rates of 2 percent or more.

Even markets like San Francisco and Phoenix, where median prices have been increasing, the numbers of depreciating homes is significant and has increased to more than 10 percent in the past 12 months.  In June, 14 percent of San Francisco's homes and 22 percent of Phoenix's are losing value at a 2 percent annualized rate.  The median continues to rise since more than half the prices reported each month are still rising.

Of the ten markets, selected for size and location, all ten experienced an increase in the numbers of homes losing value.  Over the past year, the numbers of homes losing value grew by 30 percent in Washington DC, 27 percent in Los Angeles, 25 percent in New York, 21 percent in Chicago, 20 percent in Miami, 17 percent in Phoenix, 13 percent in San Francisco, 11 percent in Seattle, 5 percent in Atlanta and 3 percent in Denver.

"In the past year segments of major housing markets began losing value even while median sales prices continue to rise.  These pockets of declining value are growing rapidly particularly Eastern and Midwestern markets,"  Allan Weiss said.  "Home buyers and sellers should be careful not to rely on median home prices to guide buying and selling decisions in today's environment in which trends are fragmenting and generalizations can be misleading."

Weiss said the increase in depreciation is not limited to lower priced homes. "Many of the homes that have switched from gaining to losing value are in the middle and upper price tiers, not just the lower tiers.  In many markets like those in the Midwest and East where demand is not as strong as it is in many Western markets, pockets of depreciation have spread rapidly across geographies in many cases with little correlation to property type, value or age of home," he said. 

He advised home buyers and sellers not to rely on metro medians to judge their market but instead to gather highly local data on recent comparable sales, seek professional assistance to analyze local comparable sales and look at maps of changing home values by Zip code on Owners.com. 

Ten Top Markets, June Data

Percentages of Homes

Losing 2 percent or More in Value Annually

Rank

Metro

 Percent of Houses Declining



June 2015

June 2014

1

New York

45.2 percent

20.0 percent

2

DC

44.9 percent

14.5 percent

3

Chicago

35.6 percent

14.4 percent

4

LA

28.5 percent

1.1 percent

5

Miami

22.3 percent

2.1 percent

6

Phoenix

22.3 percent

5.2 percent

7

San Francisco

13.8 percent

0.6 percent

8

Seattle

13.7 percent

2.5 percent

9

Atlanta

8.4 percent

3.3 percent

10

Denver

3.4 percent

0.5 percent

Average percent Declining

23.8 percent

6.4 percent

Weiss Analytics Residential Research tracks value trends at the individual house level for 5500 Zip codes and 100 metro markets.  These indexes are depicted in Weiss Maps by displaying houses as color coded dots with appreciating houses in shades of green and depreciating houses in shades of red.  Like weather maps of local markets, these maps are dynamic and show each recent month in succession bringing the market to life. Weiss Maps give consumers and investors a more accurate picture of local market conditions than maps based on median prices in entire Zip codes or CBSAs.

Allan Weiss urged consumers seeking information about their homes and neighborhoods to see for themselves how values have changed in recent months and how they are expected to change over the next 12 months by accessing Weiss Maps at Owners.com at http://www.owners.com/  or at http://www.weissindex.com/.

About Weiss Residential Research

Weiss Residential Research LLC was founded by Allan Weiss, former CEO of Case-Shiller Weiss, to help fill the knowledge and innovation gap that lead to the great housing crash of 2007 as well as to help mitigate the financial risk of home ownership going forward.  WRR is a pioneer in next generation home price analytics.  Building on Weiss' unique expertise in repeat sales home price indexes, he has increased the resolution of market analysis by nearly 10,000-fold.  WRR has created nearly 100 million repeat sales indexes, one for each house, through the use of Big Data techniques, novel algorithms and by harnessing the power of massively parallel multi-CPU computing power.  

WRR's approach presents home price dynamics at the house level or any user defined aggregation.  Instead of being forced to use arbitrary market definitions such as 'metro area', users can define their own markets such as 'all houses with a current value above $500,000 within a 50 mile radius of the Statue of Liberty.'  In some cases markets organically define themselves as can be seen by the clustering in our market maps and dynamic maps. New trends can therefore be discovered, new sub markets defined, compared and ranked. 

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SOURCE Weiss Residential Research LLC