As you may recall, a few months ago the NWMLS statistics for April showed a slight increase in prices (+2.0%) month-to-month. Well, the April Case-Shiller Home Price Index has been published, and surprisingly, they show an increase for April as well, but not nearly as much:
Up 0.7% March to April.
Down 4.9% YOY.
According to Case-Shiller, home prices in Seattle did get a slight spring bounce, and inched up slightly to “only” 6.6% below their July 2007 peak.
Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. Portland and Seattle seem to be moving in virtual lock-step for the last few months. Portland also saw a month-to-month increase in April. Both Northwest cities are performing worse than San Diego or L.A. were at this point in their downturn. This is most likely due to the financial crunch, which had not yet gained full steam 17 months ago.
And here’s the graph of all twenty Case-Shiller-tracked cities:
Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.
Again note that Portland and Seattle both had little bumps with the most recent data. However, even with the bump, Seattle has still declined more in the nine months since its peak than 10 out of the 11 other cities on the chart, including Portland. At this point in San Diego’s decline, prices were down only 1.2%, San Francisco was down 3.5%. Those cities have now seen a total decline of 28% and 25%, respectively.
Here’s the “rewind” chart. The horizontal range is selected to go back just far enough to find the last time that Seattle’s HPI was as low as it is now. This gives us a clean visual of just how far back prices have retreated in terms of months.
With the apparent “spring bounce,” the price rewind stayed steady in April at approximately 21 months.
Still no bottom in sight down in California, which means the “it won’t get as bad here” talk still doesn’t really have a baseline to compare with. I highly doubt that March was the bottom for Seattle. You can see that a number of other cities have bounced up and down on their way down to 20%+ declines, and that is probably all that’s happening here.
Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.
(Home Price Indices, Standard & Poor’s, 06.24.2008)
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47 responses so far ↓
1
BellinghamREnter
// Jun 24, 2008 at 10:16 am
http://www.msnbc.msn.com/id/25193264/from/ET/?ref=patrick.net
Literally bought her own hype. That’s really too bad. You know, as much as I’m rooting for this to unwind, it will probably get so bad that I’m gonna actually feel sorry for a lot of these people…
2
softwarengineer
// Jun 24, 2008 at 10:48 am
IF WE SELL, THEY WILL COME
Yes, real estate has bottomed-out in Seattle and the long awaited bounce back is coming on board as predicted. It isn’t just an anomaly in the data, has Tim suggests. Its real as steel.
Who cares if unsold inventory was removed from the listings in bulk, who cares if no one can afford them and banks have tightened credit. The FHA will offer 0 down loans again to marginal buyers and the honest tax paying investors will bail the FHA loans out if they go belly-up, its only fair the ones that are fiscally minded bale out the spend thrifts.
3
Blah
// Jun 24, 2008 at 10:48 am
So does this mean if you want to buy a house, see what it was worth in July of 2006 and offer 5% less?
4
Ray Pepper
// Jun 24, 2008 at 11:02 am
The “Thrilling” bounce made me do the Pee Wee Herman Tequila dance at about 7am….I’ve been doing it for 4 hours now!!
Ray Pepper
http://www.500Realty.net
5
B&W Nikes
// Jun 24, 2008 at 11:17 am
You gotta love headlines like this one from Marketwatch: Four years of gains in home prices wiped out. Has the return trip from magical Hy-Brasil finally shaken off the fragrance of endless appreciation? What a hangover.
6
biliruben
// Jun 24, 2008 at 11:27 am
Shiznit. I missed the bottom.
7
SeattleMoose
// Jun 24, 2008 at 12:01 pm
Dead cat bounce……whoo hoo!!!
8
Randal J
// Jun 24, 2008 at 12:19 pm
Any idea what accounts for the time phasing between Seattle and SoCal? Is there any solid reason to believe that Seattle would lag the others during the “recovery” phase?
9
Interloper
// Jun 24, 2008 at 12:25 pm
This data is real interesting and we can’t simply dismiss it.
If you look at the Case-Shiller history, predictable, abrupt seasonal price direction changes happen in these markets:
- Denver
- Atlanta
- Boston
- Cleveland
- Dallas
Seattle/Portland do not have this abrupt pattern, they have more of a spring “acceleration” from gradual price increase. This could mean Seattle will lag the price declines in the rest of the country in May and June as well.
10
Bits_of_Real_Panther
// Jun 24, 2008 at 1:34 pm
Anecdotally, used houses in my Snohomish Co neighborhood are selling briskly as long as they are priced at ‘06 levels, exactly where the C-S index is today. There is a ton of competition from new development but the builders are being more stubborn with their pricing for some reason.
11
TJ_98370
// Jun 24, 2008 at 2:06 pm
Bloomberg article
S&P/Case-Shiller Home Prices Fell 15.3% in April
12
vboring
// Jun 24, 2008 at 2:09 pm
now that prices have bottomed, they can rocket to infinity - sarcasm
this isn’t even a dead cat bounce. it is a non-seasonally adjusted data point.
13
B&W Nikes
// Jun 24, 2008 at 2:24 pm
Should Everyone Own a Home? on KUOW’s The Conversation today.
14
jon
// Jun 24, 2008 at 2:34 pm
“As you may recall, a few months ago the NWMLS statistics for April showed a slight increase in prices (+2.0%) month-to-month. ”
Looking at month to month changes in CSI is confusing because it is a 3 month rolling average. Since today’s result is really (feb+mar+apr)/3 and last month was (jan+feb+mar)/3, the so-called mar-apr difference is really (apr-jan)/3.
It does seem like things have gotten worse on housingtracker.net the past few weeks, so future CSI will probably continue at full speed down for a while.
15
Andrew
// Jun 24, 2008 at 5:02 pm
I’ve been pondering your Case-Shiller Home Price Index charts (offset by
“peak month”) and I think that it might be useful to view the chart differently.
As I’m in the process of buying a condo in Belltown, I’m obviously concerned
about future drop in price. What if you normalized all markets to say that
the average house cost $1M at three years prior to “peak month” and then
adjust it accordingly based on actual YOY. This might help illustrate the
argument that my realtor been using - that Seattle didn’t grow as fast/far
as other markets and will probably not drop as much in the future. Just
by eyeballing the YOY charts, it suggests that San Diego/LA/etc markets
could fall much more than Seattle.
16
Scotsman
// Jun 24, 2008 at 5:16 pm
If anyone can’t point out a statistically significant change in the market’s fundamentals- area employment, population, finance rates, real wages, etc., then I’ll believe this is noteworthy. Otherwise, it is indeed full speed ahead on the continued decline.
17
Scotsman
// Jun 24, 2008 at 5:18 pm
Make that: “CAN point out…” Type much? No, but I’ve read about it!
18
magnolia44
// Jun 24, 2008 at 5:29 pm
yep its looking just like san diego… man you guys have been right on the money….lmfao
maybe next month…or the next, it shouldnt really matter makes for a fun site.
19
TJ_98370
// Jun 24, 2008 at 6:43 pm
Way off topic -
B&W Nikes - I’m just sick enough to like your avatar / gravatar. What the hell is it?
20
david losh
// Jun 24, 2008 at 6:55 pm
What is this data based on? I see a continued erosion of pricing in the market. The chart shows data back to 2001, 2002. By comparison we should still be above those years in terms of pricing, but not quite back to 2004 prices.
So how do these charts work?
21
wreckingbull
// Jun 24, 2008 at 6:58 pm
BellinghamREnter’s article points out something.
How many times have you had to endure the tools in the RE industry try to tell you that real estate is a ‘forced savings’ plan. Well, look no further than Ms. Butterfield if you want to see how a (non-diversified) ‘forced savings plan’ works out. Poof!
22
crystalball
// Jun 24, 2008 at 7:18 pm
The spring bounce looks like what I predicted back in February:
http://i251.photobucket.com/albums/gg317/bubbleblog/CSI_deflationFromFeb07-1.jpg
23
AndyMiami
// Jun 24, 2008 at 7:38 pm
Tim,
just a quick question: how does the April/March CS price increase compare to the last ten years? Even Miami saw a decrease in negative month to month decreases for April/March vs Feb/Jan.
Also, is median price factored into the CS index? There are less properties selling, but the high end always drag in cyclical downturns.
just some thoughts..
24
economist
// Jun 24, 2008 at 10:02 pm
S&P/Case-Shiller Home Prices Fell 15.3% in April
No they didn’t, they fell 15.3% in the year ending April 30.
And this from Bloomberg, for crying out loud.
25
patient
// Jun 24, 2008 at 10:19 pm
Remember the interest rates in April? Below 5% for a fixed 30y, which I think is the lowest ever for the 30y fixed. My guess is that in April the average person on the street was still not aware of that Seattle’s bubble was leaking. The c/s they had was for Dec 07 and the mls median from March. Not that much decline reported. So, the lack of buying was mostly due to lack of funds. Apparently the few that could get funds drove up prices ever so slightly when their funds increased due to the low interest rates. Well, guess what the interest rates are back up and even more important the buyer psychology is now negative since Seattle’s bubble and it’s leakage is now out in the open. I think this sets the stage for an accelerating decline.
26
Garth
// Jun 25, 2008 at 12:52 am
Here is an article about Microsoft hiring the 2nd most people locally they ever have.
http://blog.seattlepi.nwsource.com/microsoft/archives/141616.asp
It also talks about them trying to find enough downtown Seattle offices space for 1750 employees.
Bubbleheads always want to downplay the effect, but for every MSFT employee there are also employees at vendors too. College kids seem to hate computer science even more than ever, so many new hires will continue to be new residents to the area.
27
b
// Jun 25, 2008 at 1:36 am
Garth -
Microsoft employees don’t make enough to afford the average house around Redmond/Bellevue (medians around $600-650k). Maybe a dual-MS salary level household, or a director level manager. I am one of those highly paid software developers, so I should know. Unless you got into the RE game well before the bubble, or stumbled on a pot of gold, you won’t be buying "chocolate" for a while until prices drop and wages rise.
28
what goes up comes down
// Jun 25, 2008 at 3:09 am
Oh surely, all the new microsoft employees will be hired in at 200k so thy can buy 600k houses. b, you don’t think MS would try to get people as cheap as they could do you?
29
matthew
// Jun 25, 2008 at 5:38 am
All those B1 Visa hires will easily be able to afford a 410k house!
30
rafael
// Jun 25, 2008 at 7:45 am
I just talked to a MSFT employee who is making around $110k and is in trouble. He is selling her townhouse which he bought for $575k in kirkland in 2006 and is trying to unload it for $600k..no takers!! The neighbor just walked away and the bank is left holding that property. Nice place with 1600 sqft but worth about 400k…prices way over inflated!! 25% decline is coming!!
31
AmazedRenter
// Jun 25, 2008 at 7:51 am
As a Microsoftee, I have the “scoop” on the “record number of new employees hired. We did hire significantly, but a good portion was due to acquisitions.
Plus, how did the housing market do anyway in the past 12 months, Garth? The market has been going straight down, even solid MSFT hiring couldn’t stop it. Prices are too high. Period.
Quote from internal release:
Microsoft’s employment figures are watched closely by regional economists, as a barometer of the local technology employment market. In the Seattle region, the company added a net total of 3,346 employees in the past 11 months, bringing the total to 38,856 at the end of May.
But that, too, was inflated by Microsoft’s purchase of aQuantive, which employed about 600 people in the Seattle region.
Without the local aQuantive workers, Microsoft would have added a net total of about 2,700 employees in the Seattle region — more than it grew locally last year, but not as much as in 2006. The record year for Microsoft’s employment growth in the Seattle region remains 2000 — at the height of the technology boom — when the company added nearly 4,500 employees locally.
32
Sniglet
// Jun 25, 2008 at 8:03 am
I think it is a bit naive to think that Seattle’s top employers will remain unscathed from the global economic recession that is looming. Just yesterday there was news that Boeing is losing up to a third of it’s orders, and they were perceived as one our “golden boy” employers that couldn’t go wrong with their new efficient aircraft models.
http://seattlebubble.com/forum/viewtopic.php?f=5&t=1430
Things can change amazingly fast for the other tech companies as well when the economy turns south.
33
david losh
// Jun 25, 2008 at 8:32 am
Boeing contracts are now up for renegotiation in an election year so don’t count them out. Microsoft is just one piece of the Adobe, Amozon, Microsoft puzzle that is gathering at South Lake Union. It must be all the cheap rent.
Anyway I’m still trying to figure out the data. It looks bad, but it doesn’t really say anything. Prices need to return to 2005 levels to be “normal.” I don’t see prices going to 2003 levels but if they did they would be good solid prices.
I don’t see any of that in the charts. What’s the plus 5% to a negative 25% of what? In 2001 were we 5% higher than what mean figure? It makes no sense. And today are we 20% below fair market value of 2001? Then the bombing chart where all the lines are falling like a nuclear war head gaming graphic, the decline from peak, what the hell is the peak and set by whom?
34
softwarengineer
// Jun 25, 2008 at 8:56 am
WE NEED MSFT/BOEING AVG WAGES IN WRITING
Last time I looked at a MSFT employment website there was like one bubble head type hired for 20 or so service sector administration jobs [low paid]. Lou Dobbs CNN has already documented that Bill Gates’ type H-1Bs brought in are mainly lower skilled workers replacing local resident Seattle jobs that would have been at higher wages. Besides, why do we go to a college dropout like Bill Gates for American direction on college placements of techies? LOL
Another thing, the 757/767 was developed in 1978 at Boeing with about 70% technicals [folks with a year or two of college] and engineers working with them; the 757/767 airframe was a rousing success too. Back then we hired local Americans and trained them the skills. Easily too, but we paid them real American wages too….why can’t MSFT hire our Seattle area kids and train them into higher paid jobs the same way? I know, he’s too cheap and with the way VISTA went lately, it looks like his way is the wrong way too.
35
Transplanted Systems engineer
// Jun 25, 2008 at 9:16 am
April and May statisticaly have the highest Month to Month increases in Seattle. If you look at the median % increases for April & May (from 1990 to 2007), you will note the Median Month to Month increase in April is 1.25% and May is 1.29%. No other months have a Median greater than 1% (March is the third highest with a median of .9%. After May the increases really start to drop off, so my feeling is this is the much hailed “spring rally” - which frankly doesn’t look all that good. I wouldn’t be surpirsed if may also shows an increse after which we will likely be back to declines.
36
Tsuru
// Jun 25, 2008 at 9:17 am
Man, that’s funny. Don’t let anyone in HR hear you say that vendors are employees.
Besides, I might buy your point if MSFT was hiring only college grads from out of state. That would mean that there was a large net influx of new high income wage earners in the area. However, I think that there are probably just as many local people moving laterally from an existing job in the area. So the net gain to the area (and local RE prices) is marginal. Certainly not enough to justify a >$400k median in the area.
37
Garth
// Jun 25, 2008 at 9:53 am
Tsuru,
People at vendors are not employees of microsoft, but they still have software jobs, at rates similar to those at MSFT without the long hours or need to compute to redmond.
38
Aaron Smothers
// Jun 25, 2008 at 10:05 am
Some info on salaries at msft:
http://www.glassdoor.com/Salaries/Microsoft-Salaries-E1651.htm
AS
39
rose-colored-coolaid
// Jun 25, 2008 at 10:53 am
This is key. We hear constant complaint from high tech employers that they cannot find any qualified employees and that not enough college graduates are studying the sciences.
Most of this is make believe, and is the employers way of demanding lower paid labor from Asia. Also manufactured is the belief that America is lagging behind in technical workforce. We count technical workers differently than other countries. China and India, with populations 4 times that of USAs, include many trade jobs, like mechanics, when they calculate how many people are graduating with technical degrees.
40
Greg
// Jun 25, 2008 at 7:59 pm
Assuming Seattle is “delayed” compared to other markets is a massive statistical assumption. It sounds nice on paper but has little value. It would be better to develop an algorithmic-smoothed moving average on the other data and then use the most predictive algorithm on the Seattle data. Look for crossovers of different moving averages to predict upswings and downswings. You could use Monte Carlo analysis on the results to determine how accurate your predictive system is, and whether it holds water.
Now that’s proper data analysis.
41
Greg
// Jun 25, 2008 at 8:04 pm
One thing people forget is that the market crash is fully intentional. Erasing the middle class is on the agenda. How else can you get proud, belligerent Americans to submit to the loss of their constitutional rights under a new UN-sponsored constitution? If you don’t believe it, you haven’t been reading what’s going on in the EU lately. We are next on the agenda. World government is just around the corner.
42
Garth
// Jun 25, 2008 at 8:53 pm
Greg,
As soon as I hear someone mention the north american union garbage their credibility with me is totally shot I would rather listen to an amway sales pitch or a timeshare offer than that nonsense. What an impossibly complicated conspiracy theory that is. It makes all other conspiracy theories look plausible.
Get out your tin foil hat!!
43
On Topic This Time
// Jun 25, 2008 at 8:56 pm
Microsoft does bring in a lot of “college kids” from out of state, but they aren’t making six figures, even with bonuses and stock included they’re in the $80’s.
They can’t afford homes at today’s prices either, especially with their other major life costs to deal with, like tuition loans and cars and poor financial management.
44
jon
// Jun 25, 2008 at 10:26 pm
“Seattle leads in high-tech job growth”
http://blog.seattlepi.nwsource.com/venture/archives/141867.asp?source=rss
The numbers are a couple of years old, but Seattle may well still be in the lead. Drivers license numbers show that the total migration in is much larger than just the tech jobs.
I think the areas that saw more rapid increases in prices were fed by people trying to beat retiring boomers to their retirement locations. Those areas priced themselves out of the retirement business, and it collapsed. Seattle probably had some equity locusts bring their gains up here and drove prices up. But the market here is driven by jobs, which has slowed some but is still going on.
45
what goes up comes down
// Jun 25, 2008 at 10:32 pm
Garth, I don’t really think anyone gives a crap if they have credibility with you or not — man talk about grandiose ideas of self importance.
46
b
// Jun 25, 2008 at 11:17 pm
jon -
what is the market driven by in boston or silicon valley? how about spain and ireland? I will give you a hint: credit. it has nothing to do with jobs at all.
47
Case-Shiller: Let the Decline Continue | Seattle Bubble — News & discussion about real estate & the housing bubble in the Seattle area.
// Jul 29, 2008 at 7:08 am
[...] month’s Case-Shiller data showed a slight increase in prices month to month, possibly signaling the end of the bust for Seattle. Or not. This month’s [...]
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