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Published March 31, 2017

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

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

I just got back from a real estate mastermind conference; lots of very smart investors. NONE of them knew that nearly 1/5th of all major US real estate markets are now in decline.

They were blown away when I showed them the list (scroll down).

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 year-over-year basis! That’s almost 1/5th of all U.S. real estate (17.1% to be exact).

It’s much worse on a quarter-over-quarter basis; 199 major markets – almost HALF of all markets – declined. (Year-over-year comparisons are more reliable than quarterly, so we’ll stick with Annual data for this discussion… but the quarterly data is quite troubling.)

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.

Here’s what the Yr-Over-Yr Advance-Decline
data looks like for the overall National market:

Advance-Decline Momentum Indicator vs. Home Price Appreciation clearly shows the U.S. market is about to exit the green zone and may enter the red zone if history is any indication of things to come.

#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.

It appears the U.S. market is about to exit the green zone next period (especially given the very weak quarterly data noted above). As you can see, it has an historic tendency to drop quickly towards the red zone once it passes below the green area. It’s time for ALL investors to regularly scrutinize their local markets much closer.

Paid members can customize this Advance-Decline tool by logging in and visiting:
Real Estate Market Breadth Analyzer

(Select the Qtr-over-Qtr option to see how fast this indicator is falling.)

Below is the list of cities with
declining year-over-year home prices…

Chart depicting the 69 declining U.S. markets, ranging from Huntsville, Alabama to Watertown-Fort Drum, New York.

Chart depicting the 69 declining U.S. markets, ranging from Huntsville, Alabama to Watertown-Fort Drum, New York.

Chart depicting the 69 declining U.S. markets, ranging from Huntsville, Alabama to Watertown-Fort Drum, New York.

Published March 31, 2017

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