Monday, October 7, 2019

How Las Vegas Deposed Long-Reigning Seattle to Number Two Position

(Click on the image to enlarge)

The above growth table shows that the Las Vegas housing market registered an impressive overall growth of 23.94% versus Seattle’s 17.58% between January 2017 and July 2019, though Seattle was maintaining a slight edge until July 2018. However, since August 2018 the Seattle market started moving sideways while Las Vegas continued to inch up with a diminutive growth of 4.75%.

Of course, the monthly rates – especially the overall rate: Las Vegas’ 0.80% vs. Seattle’s 0.59% – depict the competitive picture better. While in the beginning they were head to head at 1.02% each, Seattle has totally cooled off since August 2018, showing no growth whatsoever.

The graph makes the statistical case as to how Las Vegas gradually toppled Seattle to regain the top spot in the country which, by the way, it used to hold prior to the last recession as well.  Las Vegas’ growth has been steady all along this entire period, whereas Seattle has been erratic, with exponential growth in the beginning followed by an unusually long soft patch, without any signs of green shoots.

Las Vegas’ trend has been totally linear with significantly stronger statistical attributes: high r-squared (0.967), a very positive slope (angle) and a low intercept – all pointing to a meaningful all-round growth and, given the strong fundamentals, the growth is expected to continue for a while. On the other hand, Seattle has a much lower r-squared (0.804), a subdued angle and a high intercept – all pointing to a much muted growth environment.

Though Seattle has developed a strong support around 248 to 250, it must maintain it, and any significant breach of this support could initiate a quick downward spiral towards 238 to 240 (or lower). On the contrary, though Las Vegas has been consolidating, the slope remains upward generating higher highs, signaling all strength and a possible run towards the 200 level in coming months.

Obviously, Las Vegas’ higher growth has also been contributing to higher volatility, with a COV of 7.42%, far exceeding Seattle’s COV of 5.37%.

P.S. These are Case-Shiller’s seasonally-adjusted indices so the month-over-month comparison is fine. While using Case-Shiller’s seasonally unadjusted indices, one should compare July-2019 with July-2018 and July-2017, etc. 

by: Sid Som, MBA, MIM
President, Homequant, Inc.

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