Friday, July 19, 2019

Case-Shiller Housing Trends – Boston, NYC and Washington DC

-- Intended for New Analysts and Researchers --

(Click on the image to enlarge)

According to the above Case-Shiller indices, while these Northeast housing markets are still growing, Boston has been more vibrant than NYC and Washington DC. Of late, the growth momentum of NYC and DC has significantly tapered, remaining more or less sideways and in the consolidation mode.

The fact that the (greater) NYC housing market has been stagnating around 200 (between 200.10 and 202.42) despite the recent decline in interest rates perhaps confirms that the cap on SALT deduction has been seriously impacting this high property tax market. If the economy hits a soft patch in 2020, the SALT impact could be way more pronounced. Of course, the tumbling of foreign buying has been impacting NYC, alongside LA, Miami, etc. "Homes bought by people from outside the U.S. from April 2018 through March 2019 tumbled 36% to below $78 billion dollars, according to a new data from the National Association of Realtors."    

During the same period, Boston and Washington DC have reacted more positively to the falling interest rates. Boston has moved up from 215.98 to 220.69, while DC has grown from 227.86 to 231.51. Of course, these are also high tax markets so the impact of the aforesaid cap has been quite visible since Mar-2018, lately bucking the trend due to the lower interest rates. If the rates stay low (as a round of rate cutting is in the offing) and are quickly factored in, the sideways-to-declining trend could return. 

These are seasonally-adjusted indices so the month-over-month comparison is fine. While using the seasonally unadjusted data, compare Mar-2019 with Mar-2018, etc. 

Disclaimer - The author is not advocating the Case Shiller indices listed here. Consult your Financial Planner for an appropriate asset allocation model and/or trading strategies for different markets, including housing.

Thank you.

Sid Som, MBA, MIM

President, Homequant, Inc.

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