Thoughts on the Case-Schiller Index and the Upcoming Spring Market

	EffectiveDate	Index Level	1 MTH	3 MTH	12 MTH
Index Levels
S&P CoreLogic Case-Shiller New York Home Price NSA Index	Sep-2018	199.65	0.23 %	0.78 %	2.62 %

As lower Fairfield County is directly impacted by real estate trends in New York City, I keep an eye on these figures both for looking ahead to get a sense of where we may be heading, and to have a look back at the past to have a sense of perspective. In August 2008, (just after the stock market crisis)  for example, the New York index level was at 161.94 compared to 199.65 today. To get some additional perspective, the levels we are seeing today are quite similar to the July 2005 level of 199.86.  Case-Schiller saw its highest levels in New York in June 2006, at 215.25. After the crisis of 2008 the levels went through a roller coaster of dips and rises through April 2012 when the nadir of 157.95 was reached.  Since that time we have continued to see periodic small swings in the market with a general move upwards. The Fed raised interest rates in September and most of my colleagues in the mortgage business expect them to rise further. What is the likely impact going to be on our real estate market? 30 Year Fixed mortgages (for those with good credit) are still below 5%.  When I entered the real estate business rates were above 8% and we were thrilled when they went down to 7%. Mortgage rates are still historically low, as is unemployment, and inflation. We live in a world where we are bombarded each day with information. So much so, that it can be difficult to see the larger picture. There are some analysts who feel that the real estate market will further correct itself.  Some home sales in our area have been motivated  by sellers who are of that opinion. As mortgage rates are likely to rise slightly, that will make make home prices somewhat more expensive, so I wouldn't be surprised to see a slight adjustment if that happens in the spring.  On the other hand, pricing is also linked with inventory.  If inventory is low and demand is high we should see stable pricing. Inventory levels in the high end of our markets remains high, and pricing for homes over $1.5 million in some markets and higher in others, has been directly impacted by that. Each market is different, but in general, homes in excellent condition under $900,000 have been selling well. Inventory levels are still above the levels that we saw in the period of 2003-2006, though, including on the lower end of the market. In our area, towns that are not directly on the New Haven train line have seen their prices more negatively impacted during the past three or so years.  Rising taxes in those towns have also impacted selling prices. Our values still appear to be relatively reasonable when compared with the cost of New York apartments.  Our great schools, diverse housing stock, great amenities, and beautiful countryside should soon be attracting those millennials reaching their 30s who will soon be having children, and will be reconsidering the costs of living in the city and private schools versus commuting from the suburbs.