One of the more telling signs indicating fundamental change in a residential property market is when it’s normal seasonal ebb and flow gives way to a new dynamic.
Most residential property markets have typical seasonal fluctuations, be it sales volume, pricing or both, that generally operate, more or less, unchanged up-market or down.
In the Northeast, the seasonal dynamic can be particularly striking with markets such as Boston and New York showing a very regular annual cyclical pattern of low sales and pricing in the dead of winter, peak sales and pricing in the spring and early summer and a marked slowing of sales and pricing in late summer and on into the fall.
These annual cycles effectively unite year to year to become the overarching trend to activity in a particular property market.
In a rising up-market, the winter lows, though lower than their respective summer highs, will invariably get progressively higher from one year to the next … in a declining down-market, the action is reversed.
In very rare circumstances though, the regular seasonal action can, for a short period, give way to a totally different dynamic.
For example, during the worst of the 90s housing bust the Boston area housing market experienced over 20 consecutive monthly price declines… the market was so weak (…and financing so broken) that the downward trend in prices defeated all seasonal patterns … prices fell sequentially no matter what month it was.
Another example is again the Boston area property market but this time the conditions were reversed.
During the late 90s the housing bubble was in full swing in the Boston area and prices were appreciating so significantly that between 1998 and 2001 there was hardly a down month…. winter, spring, summer and fall prices were on the rise.
Of the various residential property price indices currently being published, the Radar Logic RPX captures seasonal fluctuations most accurately.
Currently, the New York area RPX (… which includes many New Jersey counties) is indicating that something rare is afoot in the NY/NJ residential property market.
There has been … NO SPRING BOUNCE!
In fact, prices have been declining nearly sequentially (… month-to-month change of the monthly average) for 22 consecutive months (really 3 up months out of 22) in the New York metro market with this spring looking particularly weak.
Further, with the more active spring and summer seasons quickly drawing to a close look for the New York area prices to likely show another significant move lower as market activity fades to the lows of winter.
The following chart (click for super-dynamic zoom-able version) shows the daily Radar Logic RPX for the New York area since 2000 with the 1, 7 and 28 day aggregates broken out separately on the left axis and the year-over-year percent change to the 28 day aggregate on the right axis.