Home Appreciation Continues to Accelerate
The S&P CoreLogic Case-Shiller 20-city home price index has been increasing 2.5% to 2.9% on a year over year basis. The index is a value-weighted average of the 20 major metro area indices, including Boston, San Francisco, New York and other major metropolitan areas.
According to the Boston Globe, the 20-city index has risen 62.3 percent since hitting bottom March 2012 in the aftermath of the financial crisis and Great Recession. It is up 5.4 percent from its pre-crisis peak in July 2006.
S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index
What does this mean for our business?
It doesn’t take an economist to tell us that home prices are soaring as a result. An acute shortage of inventory at lower price points is certainly contributing to driving up pricing in the starter home market. In the Boston area, home prices were up 3.8 percent year-over-year, above the national increase of 3.5 percent annually.
While borrowing costs fueled some of that growth, it is once again, the lack of inventory along with strong demand that continues to push prices up.
Despite the upward trend carrying over to 2020, there is still uncertainty as to whether or not this trend will continue. The 20-city index is an economic indicator, but it’s just one of many. For an area like Boston, the recipe of increasing population, family income growth, low mortgage rates and limited inventory may keep our region on an upward trend trajectory. However, the stock market has faced some serious challenges lately in the face of fears of the coronavirus. This could impact mortgage rates and change the recipe for Boston. Only time will tell.
In the meantime, the Spring market is early this year, and it could be the calm before the storm. With so much uncertainty on the horizon, buyers may want to jump in and take advantage of today’s low rates.