January 12, 1999


The latest issue of the New York Fed's Second District Highlights--Second District House Prices: Why So Weak in the 1990s?--is enclosed for your review.

Following a 1980s boom, real house prices in the Federal Reserve's Second District between 1990 and 1997 have declined by 29 percent in the New York metro area and by 25 percent in upstate New York relative to the U.S. average.

The sharp disparity between Second District and national house-price trends in the 1990s is examined by authors Matthew Higgins, a senior economist in the Bank's International Research area, and Carol Osler, a senior economist in the Capital Markets area.

The relative drops in the price of houses in the New York metro area and upstate stands in contrast to house prices at their respective 1980s peaks, during which prices in the metro area had risen 56 percent and prices upstate had climbed 20 percent relative to prices nationwide.

Higgins and Osler also find that:

In 1998, an upturn in New York metro area house prices versus national prices can be linked to an improvement in the area's relative performance of economic fundamentals.

Contact: Douglas Tillett

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