1) Graphs are built on numbers. However, without understanding the qualitative factors driving those numbers, the graph is largely meaningless. We’re probably going around in circles for the Nth time here, but many of the comparison cities in this graph are influenced by fundamentally different sets of economic (i.e. the PROFESSIONAL labor market) and geographic factors (i.e. water barriers, scenic views).

2) On a related note, differentially re-setting the peak of each city’s trend line graph to time 0 is a statistical slight of hand with no basis in theory. I keep hearing people here talk about how the Seattle market lags the rest of the nation, but I have yet to hear a reasonable explanation for why that is so.

I suppose you could claim that Seattle strong local economy and it’s unique geographic features delayed the onset of the downturn. However, if you are going to make that claim, then you basically need to quit acting like Seattle is NOT different from those other cities. Moreover, you also need to seriously consider the possibility that while Seattle has experienced the same nation-wide influences (e.g., changes in national interest rates, bank lending practices), the negative impact of each of those national forces just happens to be less severe due to positive local forces.

Bottom line: technical analyses, like this graph, are pretty weak and possibly misleading without stronger theoretical justification.

If anything that graph supports the notion that seattle is not changing like the other cities. How many of the cities are above Seattle on the graph and how many below? By how much? I personally believe that Seattle prices are done appreciating right now….but this graph seems to be seen through anti-rose colored glasses.

Most of the discussions so far have focused on Seattle’s being “late to the party” in terms of unsustainable appreciation. One poster has stated that Seattle, in fact, started its run up earlier than other markets (a claim I haven’t heard before).

In any event, I’m not clear on what underlying mechanism(s) allow Seattle to continue to appreciate–even if that appreciation will slow or stop soon–if macro factors (e.g., a general tightening in the mortgage credit markets) are what’s putting on the brakes elsewhere in the country.

For the record: I’m not a bubble-denier (not even close!), not do I claim that Seattle is “special.” What I *am* is curious to understand what’s going on with area real estate, beyond the sound-bite level.

Homes that were 180K in ‘96 blew up to nearly a million in ‘06.

This constant insistence in the local media that Seattle “hasn’t appreciated as much as other places” is pure BS. Like the Silicon Valley, we just started earlier. But we only count what has happened since after ‘01.

Steve – I don’t know that anyone is disagreeing with you on that one. But if you were going to put six figures down payment on a house late last year, I bet you’d think that 10-15% decline was important, no?

Sure you could make up the loss if you held it thirty years – but you could also put the money in the market, rent for 45% the monthly nut, and come back and buy the next year for less – without getting into a crazy bidding war.

Sounds pretty good to me.

Seattle did not “boom” as much as other markets and it will not collapse as fast either. You will NOT see 30-50% home price deceases here. Sorry folks, it’s not going to happen.

Home prices may drop 10-15% from from the peak of the housing market last year, but all that does it get us back to the home price level of about January 2006. The market will then flatten out to essentialy 0% appreciation for a few years, as I have been saying for the past couple of years.

That’s my story and I’m sticking to it.

*yawn* game over, thanks for playing.

“Half of New Jobs Are Real Estate Related”
http://www.google.com/search?client=opera&rls=en&q=housing+asha+bangalore&sourceid=opera&ie=utf-8&oe=utf-8

“The Contribution of Housing to Recent U.S. Employment Growth: 27% to 40%”
http://www.rgemonitor.com/blog/roubini/144500

I wonder why I bother anymore. Fighting ignorance is a hopelessly losing war. I’m convinced that if I set up a printing press on the corner and began printing dollars to buy bags of flaming dog crap, within a week we’d have morons the world over gibbering about how “they’re not making any more dog crap”, “dog crap only goes up”, and “buy some dog crap now or be priced out forever”.

Now I rent at 35 cents on the dollar until the P/E of real estate returns to reasonable levels. When that happens, it will make sense to buy. Won’t be this month, this year, or possibly even this decade.

Just finished Kindleberger’s “Manias, Panics and Crashes”. I highly recommend it to anyone who thinks that we will just settle right back into a nice 6-8% year appreciation. Bubbles deflate. It’s what they do best.

When are you going to realize that the wave of recession that is just over the horizon will put an end to such talk of soft and fluffy landings.

If you think foreclosures are bad now, just wait.

Its a small wave until it gets pushed up on our shore.

http://finance.yahoo.com/q?s=%5ESSEC

And while data released Tuesday gave no clear signs of an end to the housing slump, Thayer noted that he feels confident that consumers can “work through continued weakness in housing” as long as the employment situation remains healthy. Standard & Poor’s housing index on Tuesday showed that U.S. home prices fell 1.4 percent in the first quarter compared to a year ago, the first time since 1991 that prices have shown a quarterly decline.

On Thursday, the Commerce Department reported that sales of new homes surged in April by the biggest amount in 14 years, but the median price of a new home fell by the largest amount on record. On Friday, The National Association of Realtors reported that sales of existing homes fell by a larger-than-expected amount in April, while the median price of a home sold fell for a ninth straight month.

In the report you will see new home sales compared to exsisting home sales. For new home sales let’s take our own ticky tacky town houses in Seattle. They started at $250K then jumped to $350K and for some unknown reason people started paying $425K for the same pieces of crap they were getting for $350K. The price of granite was going down and the price of the units was going up. Labor prices were what made head lines but I think suckers paying too much was the story.
Now the suckers are back to paying $350K and for some reason that’s seen as a bargain so sales are brisk.
Exsisting homes are being left to the side lines while people rush for those new homes that have the big discounts. Exsisting homes prices must be falling at a more modest rate.
The reality is that the price point of our ticky tacky town houses is still $250K. Land cost at $62500 plus construction at $136000 plus selling and holding at even $30K leaves the expected $20K margin of profit over eight units is $160K for six months work at $250K per unit. So how about that $350K price point that was selling for $425K last year? That’s a whole bunch of money for some body. Here’s the sad fact: those town houses are built on prime Real Estate dirt. If you times them by $120K for eight units that puts the value of the dirt at $960K. I can put twenty four housing units on that dirt today.
So the value of that $350K housing unit is really only about $120K, OK let’s go all out and pretend it’s $250K . What are you guys going to do about that?

You can get a pretty accurate quote from the Windermere site using this link. KingCo SFRs are over 8600 as of today.

Also, it might be obvious to most, but it’s interesting to note that cities with the most severe appreciation are also the cities that have the most severe negative slope. These graphs lend credibility to those that have said that Seattle will not see the same depreciation as some other cities have experienced / will experience.

I take the latest data from the Bubble Markets Inventory Tracking blog and take the percentage of that equal to how comparable it was last month. In this case, last month’s final count on the blog was 14,608, compared to NWMLS SFH inventory of 7,649 = 52%. 52% of May 20’s reading of 16,207 = 8,486.

It’s really just meant to be for my own personal use, to satisfy my curiosity of how inventory is stacking up through the course of the month.

The bump-up before the eventual fall in LA leads me to wonder about seasonality and it’s effect on rate at which YOY changes decrease. I can think of a way to display prime selling-season on the graph, or even if this is constant across cities, but it would be interesting if you could perhaps place a do-hicky or something where April is.

In an unrelated matter, looking at your spreadsheet, there is already a number for total inventory in May. That number isn’t known yet, obviously. What’s the deal?