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Metro DC/Case Shiller Disconnect (Part II of III): Seasons

June 3, 2011  |  by Jonathan Miller

Seasons This is the second of a three part series on the disconnect between the Case Shiller Index for DC and what is happening in the current market.

In the chart above, I compared price trends that were reported in May for both the RBI Median Sales Price Index and the S&P/Case Shiller Home Price Index for “Washington, DC”. Both indices in the chart are based on closed sales.

RBI: RBI shows higher price levels than CSI for most of the decade. The market peaked in 2005, about a year earlier than CSI shows and remained at a plateau a year longer than CSI. From the RBI data it is clear that there are seasonal ups and downs in the Washington DC metro area housing market with periodic volatility. It is curious that the federal homebuyers tax credit had no real impact on the CSI results in 2010 and 2011. The smooth bell curve shape of CSI over the decade shows it to be a tool for academia to look at large macro trends rather than as a tool to observe the housing market close to the point where a “meeting of the minds” occurs between a buyer and seller signing a contract.

CSI: The results show a 1 year lag behind RBI price trends and a removal of all seasonal patterns or short term impact from external stimulus such as the federal tax credit for homebuyers and the credit crunch.

Other posts in this 3-part series:

I Metro DC/Case Shiller Disconnect (Part I of III): Timing [MRIS Blog]
III Metro DC/Case Shiller Disconnect (Part III of III): Prices Lag Sales [MRIS Blog]

Posted in Blog, Jonathan Miller Insights

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