Double Dip In Home Prices Hits Silicon Valley
After seemingly reaching a bottom early in 2009, home values in Santa Clara and San Mateo counties have now dropped again in what some economists see as a double dip, raising new concerns about the strength of the housing market. Home values have now fallen 25.2 percent from their April 2006 peak in Santa Clara, while San Mateo prices are 24.2 percent below peak levels.
A double dip is when prices fall again shortly after recovering from a previous drop. The latest drop in home values began around the middle of 2010, when federal and state tax credits for homebuyers expired. The tax credits fueled demand by convincing many people to buy homes sooner than they otherwise might have. Their expiration left a reduced number of buyers in the second half of the year, leading to a slowdown in sales which in turn drove prices down.
But a number of realtors believe sales and prices are about to begin climbing. Zillow also reported that the number of so-called underwater homeowners, or those who owe more on their loans than their home is worth, is up in the two counties, after having fallen in 2010’s third quarter. Zillow also says that California experienced a double dip in home prices in the final quarter of 2010, but expects a recovery in prices over the next few months.