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List of the 199 DECLINING U.S. Real Estate Markets

The previous Market Report caused lots of questions about when to use “Year-Over-Year” vs. “Quarter-Over-Quarter” data. When analyzing YOUR local market, you need to look at BOTH; they produce very different results in rapidly changing markets (that’s a good thing!).

Half of all real estate markets lost value Qtr-over-Qtr

Almost 1/5th of all markets lost value Yr-over-Yr

You can see from the two headlines above, there’s a huge difference between Annual vs. Quarterly numbers. That’s the first sign our current (overall) market conditions are starting to change rapidly.

Year-Over-Year (Y-O-Y) looks at the change from 12 months ago. It’s more reliable in that it relies on a longer time period. Statistical ‘noise’ gets averaged out.

Out of roughly 400 major real estate markets, home prices (on a ‘real’ or inflation-adjusted basis) in 69 of those markets were DECLINING on a Y-O-Y basis. (See the Y-O-Y list here).

Quarter-Over-Quarter (Q-O-Q) numbers only go back three months; they aren’t as accurate as Y-O-Y because of both sample size issues and too short of a time period.

However…

Q-O-Q gives you an early peek into when markets are starting to change, as it appears they’re starting to do right now.

Home prices (on a ‘real’ or inflation adjusted basis) in 199 out of 400 major U.S. markets were DECLINING on a Q-O-Q basis… that’s almost one-half of ALL markets nationwide!

(See the full list of declining markets below.)

As new time periods roll out, those preliminary Quarterly indications get confirmed (or not) with Annual data. These Quarterly numbers will jump around a bit; focus on the overall trend or signal from Q-O-Q results.

Real estate market cycles don’t fluctuate up and down from week-to-week or month-to-month like you often see on “Zillow” type sites; that’s just irrelevant ‘noise’ and errors associated with how they (improperly) use ‘median’ home prices.

In addition to the list of declining cities below, we also use our Advance-Decline (A-D) Indicator that aggregates and tracks Market Breadth.

Market breadth is a study used in Technical Analysis that attempts to gauge the direction of the overall market by analyzing the number of markets advancing relative to the number declining.

The A-D below is based on Quarterly data. It’s much more erratic than the Annual A-D.

The red line has already exited the top green shaded area on a Q-O-Q basis.

#1 – When the red chart line is inside the green zone it’s a bullish – or positive – outlook on the overall market.

#2 – When the red line is in the middle zone it’s telling us there is no strong bullish or bearish direction; you must rely more heavily on market-by-market selections.

#3 – When the red line is in the bottom zone, it indicates substantial weakness in the overall market.

As with all Quarterly vs. Annual comparisons, you’ll see more variance with shorter time frames. It’s common for this red line to fluctuate up and down. The importance of this indicator is when the red line reaches INSIDE the top (green) or bottom (red) zones. It’s even more significant if it STAYS in the red or green zone for multiple periods.

You can see, even with Quarterly data, this A-D Indicator has done a very good job ‘predicting’ the beginning and the end of each major National up & down cycle.

This A-D Indicator can also be used on State and Regional levels for more granular insights. Paid members can customize this Advance-Decline tool by logging in and visiting: Real Estate Market Breadth Analyzer.

Below is the list of cities with declining Quarter-Over-Quarter home prices…

Note: These are 3-month percentage decline rates. Multiply by 4 to get approximate annual equivalent (at current run rate).

If your markets are on this list, DON’T panic!

ONE data point, whether it’s for a Quarter or a Year, doesn’t necessarily mean it’s time to buy, sell or hold… or do ANYTHING different, other than pay closer attention. That’s where Technical Analysis (TA) comes in.

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