Over the last two years, as I’ve been running this blog and researching the housing market, I’ve come across a number of interesting documents. Many of these documents do not deal specifically with the Seattle-area housing market, but are nonetheless definitely worth checking out.
In the past, I’ve simply collected such files in a folder on my USB drive, referencing them occasionally here on the blog where appropriate. However, in order to work toward the goal of making this blog the best resource it can be, I have now created a central location for these resources: the Seattle Bubble Library.
I hope that you find this to be a useful addition to the site. Please let me know if you have any suggestions for improving its utility, or if you know of documents that should be added. We will be doing our best to keep this resource up to date.
CKT » Oct 17, 2007 at 4:17 pm
This is great! A wonderful resource. Thanks the Tim!
Relatedly, I hadn’t yet seen the Seattle PI map of what Seattle is supposed to look like in 2010. It shows a birds-eye-view 3D reconstruction of downtown with the various giant condo projects color coded by year of expected completion, every year from 2005 – 2010. Of the 32 projects listed, it looks like only 4 are scheduled to be completed prior to 2008. (4 might be an underestimate; some of the buildings are obscured. It’s not much more than 4 if not 4) Can that be true?
Downtown already has a glut of condos on the market. Are there really that many condos coming online over the next three years!?! If so, we are in much worse shape than I though…
But I don’t want to take the thread off topic. Perhaps I’ll drag this over to the forum…
Steve-o » Oct 17, 2007 at 9:29 pm
I found an interesting chart at website: http://piggington.com/historical_home_prices_payments_rents_and_rates
As best I can tell, the dark blue line in the 1st chart shows the y-o-y price change to buy a home in San Diego every year since 1977 AND it’s inflation adjusted. Notice how the price changes tend to bounce around between -5% to +20% for twenty years. And then, in 2000, prices brake above 20% and just keep going. Meanwhile, rent increases (green line), on average, stayed around 0% the whole time (jeez I wonder what happened right around the year 2000?).
The second chart shows the same data, but not inflation adjusted. Looking at the chart you’ll notice that prices tend to double every ten years which comes out to about a 7% y-o-y increase on average. If you drew a straight line at 7% through the price line, it would bisect the price line very nicely up till about 2000 (at which point the price line swoops way above). Continuing this line to 2007, you’ll notice that the price line is twice as high as the trend line predicts it should be.
But Seattle isn’t San Diego, right? It’s special.
By the way, regarding the 7% average price increases in homes in SD (and I believe 6% nationally is bandied about), one should note that houses are about twice as big now in square feet than they were in the 70s (and more than twice in volume, probably, given all the vaulted ceilings you see now). So I’m pretty sure a good chunk of that 6% average historical increase is from houses just being larger. More wood, more appliances, more carpeting, more shingles yada yada.
I’d like to see a chart like the first one, but instead of just adjusting for monetary inflation, it also adjusted for house size inflation.
Crashcadia » Oct 17, 2007 at 9:41 pm
Confirmed Hindenburg Omen
disbelief » Oct 17, 2007 at 9:51 pm
Steve-o,
I don’t think the 6% YOY figure holds true for much of the country. Perhaps it’s just the natural market rate (non-exotic-finance-induced rate) for more desirable locations like San Diego.
I know of many places (I’ll use Fort Worth TX as an example) where prices have not increase by more than a third in 30 years!
In places like this (and I believe in the majority of locales), prices have only increased to reflect inflation over the long run.
deejayoh » Oct 17, 2007 at 10:05 pm
steve – you need to do a little reading up on how the Case Shiller index (the line to which you refer) is calculated. It’s based on paired sales of the same houses… so there’s no “size inflation”. It’s all price inflation.
and anyone who tells you real estate goes up by 6% a year over time is either a realtor or a nimwit (or both). long term trend is 1-2%. At least that’s what people who study the issue say.
some reading for you.
http://www.nytimes.com/2006/03/05/magazine/305tulips_shorto.1.html?pagewanted=1&_r=1&adxnnl=1&adxnnlx=1192683697-uTCIF8mliLO4bNKZCoDE0A
http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html
Tim – perhaps these should be in the libary too?
disbelief » Oct 17, 2007 at 10:43 pm
On second thought, to amend my comments above, I think that 6% annual for SD might only be the case during times of economic expansion- since (having lived there)I know even there prices don’t always go up. If you were to figure in the stagnant periods, I’m sure it would make for a lower figure in the long run.
Joel » Oct 18, 2007 at 9:19 am
I believe that prices at the national level may appear to increase at just over the rate of inflation, but if you were to look on a more local level you would find the prices track the average income in the area. So in areas that have seen lots of economic expansion and wage increases (like say in the bay area), home prices and rents will increase more than inflation. And in more stagnant areas prices will only just track inflation or worse if the area is losing lots of jobs.
cranky_cynic » Oct 18, 2007 at 10:58 am
The NY Times has a great Should You Rent or Buy calculator, as well as a How Much House Can You Afford calculator.
steve-o » Oct 18, 2007 at 1:19 pm
Deejayo, thanks for informing me on the Case Shiller index. I’m new to this issue (the bubble) but learning.
I posted about a week ago for the first time and mentioned that I belived housing in Seattle would go down 10% – 20% and then flatten out for several years. But after seeing the San Diego chart I refer to in my second post, and after reading several posts, I now believe prices will decline at least 30% in the next couple of years before flattening for several. I don’t believe the US has ever seen anything like this housing bubble and the declines will be unprecidented. I will still be selling my house and buying one nearer Seattle in 2 or 3 years, but I’ll do everything I can to stack the deck in my favor and hopefully there will hve been an appreciable decline by then.
When you say that the experts say housing appreciates 1% or 2%, I assume thats AFTER inflation. Or are the experts including upkeep, insurance, and taxes into their calculations? If so, these costs wouldn’t be reflected in the sales price and should be left out when doing comparisons of house prices. I have to believe that, nationally, and on average, house prices (Case Shiller) have at least kept up with inflation.