Tuesday, July 30, 2019

San Francisco Housing Market vs. Condo Market – Who Wins?

-- Intended for New College Graduates --


(Click on the image to enlarge)

During this period, the two market segments have moved in statistical lockstep, with high colinearity (correlation coefficient = 0.9868).

Both segments made phenomenal runs between March, 2017 and September/October, 2018, registering remarkable growth rates of 14.10% (housing) and 13.56% (condo), respectively.

Of course, since then the growth has not only tapered, but both segments have also been experiencing moderate declines. Moreover, neither segment has responded positively to the recent declines in mortgage rates. 

Considering the extremely high home prices in San Francisco (Median = $1.362M per Zillow), the cap on SALT has been severely impacting the high-end market, where the softness has increasingly been more pronounced.  

The circular congestion on the outer end of the curve (scatter plot) confirms the ongoing weakness and any immediate and meaningful breakout of this congestion seems unlikely. 

For now, it's tie. We need a few more data points to decide on the tie-breaker.

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.
homequant@gmail.com

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