Seven straight monthly drops in Greater Boston home prices at an end?
Home prices in the metro Boston region have been falling for seven straight months, according to the Case-Shiller Home Price Index for Boston issued monthly by Standard and Poors .
However, the Boston Index was basically unchanged in March 2010, perhaps signaling the end to the recent downtrend.
The Boston Index is published with a 2 month lag; the March 2010 Index is the most current reading available.
March Boston home prices stable
At 151.42, the Boston Index was down a minuscule 0.01% for the month.
This is stability is impressive since home sales across Massachusetts during March were very likely adversely affected by March’s widespread flooding in MA.
7 straight months of home price declines in Boston
After topping out at 155.95 last August, the Boston Index has fallen 2.9% during the succeeding seven months.
That’s a pretty unnerving statistic.
This decline would seem to reinforce the recent doom and gloom headlines in the media about the supposedly poor outlook for US real estate after April’s end to the home buyer tax credits:
Encouraging news in the new Index numbers?
However, there’s reason for optimism about MA home prices lurking in the Boston Index.
Looking at the Boston Index over the last several years, a pattern becomes apparent: home prices have had a pronounced seasonal swing in the Greater Boston area.
For the last four years, home prices have dipped in the Metro Boston area each winter.
Every spring for last three years, there has been a recovery in Greater Boston home prices.
Admittedly, each year has seen an overall decline in Greater Boston home prices.
But note that the 2008-2009 winter slump in Boston home prices was greatly exacerbated by the world-wide financial panic and resulting Great Recession that reached its depths during that time period.
2009 – 2010 seasonal home price slump much less severe
What is encouraging about the most recent 2009–2010 seasonal slump is that the decline was relatively modest compared to prior years.
This amelioration in the downtrend may be a sign that the Massachusetts real estate market is seeking a bottom.
See the video I made last year on how the Massachusetts housing market slowly found its bottom after the last down cycle in 1989-1994:
Will MA home prices trend upwards?
We should see some home price increases being reflected in the Boston Index over the next three or four months, if the seasonal spring/summer up pattern of prior years is maintained.
The big question is whether Boston home prices will rebound this spring and summer only to fall again next winter.
If the pattern of seasonal slumps fails to reassert itself next fall and winter that would be a clear sign of the start of a real estate up-cycle in MA.
If the seasonal slump does return, look to see if it is less severe than past years; that might be a sign of a developing market bottom in Massachusetts real estate.
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