Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries from July 31st, 2008

Comparing Boom and Bust Cycles Across Markets

By deejayoh on July 31st, 2008 at 11:38 AM · 56 Comments

The point has been made many times here that exposure to downturns needs to be viewed in the context of how much a market rose during the boom.  I thought it would be interesting to test this by comparing the total percentage gain during the boom years to the total percentage drop from peak to date across a bunch of markets, to see if I could establish a clear relationship or correlation between the two.

For the purposes of this comparison, I used the following definitions:

  • “Boom” returns are the total appreciation between 09/2001 (based on the oft cited relationship between the Fed taking down short term lending rates and the housing boom) and the peak for each market.
  • “Bust” returns are the total decline from peak to the latest reported numbers.

I used the Case-Shiller report for May as the source of all the numbers. The results are kind of interesting:

Boom and Bust Cycles
Click to enlarge

This snapshot does appear to support the assertion that there is a good correlation between boom and busts cycles across markets -and that generally speaking,  the more you go up, the more you go down. But there appear to be outliers versus the trend: Namely, Detroit on the down side, and Seattle, Portland, Charlotte, and possibly New York on the up side. This is interesting to me because the relationship between up and down markets is usually cited as evidence that the Seattle market will remain relatively stable compared to other markets – when according to this view, we appear to be bucking the trend and perhaps poised for a fall.  We are down 7% to date when the trend line suggests we should be off 15-20%

What does it mean?  Who knows. There isn’t any hard and fast rule that says every market must follow all other markets, but the inverse relationship between booms and busts does appear to be pretty strong. And it certainly is the case that Seattle has not seen as much “bust” as would be expected when compared to all other markets.

→ 56 CommentsCategories: Features · Statistics
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A surge in “pent-up supply”?

By deejayoh on July 30th, 2008 at 4:59 PM · 31 Comments

I have a couple of RSS feeds from real estate sites that I use to monitor listings that might be of interest to me.  They are targeted at a couple of neighborhoods, and focused on homes that are likely to be mid-century modern.  Over the past couple of weeks, I had noted that the volume of new listings had really dropped off.  I mean, there was almost no activity. I attributed it to the market slowing down – figured it was just a late summer phenomenon.

Then I checked them this morning, and was surprised to find five or six new listings on each.  What was going on?  So I headed over to Redfin to check to see what Seattle had in the way of new listings overall (side note:  what did we ever do before Redfin!?).  What I found there was pretty interesting:

  • There were 108 new listings in Seattle yesterday, versus 123 in the last three days and 350 in the last week.  The rate of new listings was double the average of the last three, seven, or fourteen day period!

Seattle Surge

  • I figured this might be some sort of statistical anomaly – so I checked Bellevue too.  It looks almost exactly the same:

Bellevue Surge

Checked Tacoma too. Same story:

Tacoma Surge

I’m not sure what might be going on.  I thought that listings were more likely to come on to market early in the month, not late in the month – but they seem to have exploded on the last day of the month.  I see three possible explanations:

  1. It’s normal.  The drop off just reflects the fact that homes sold.  (I don’t personally think this makes sense.  Homes aren’t selling all that quickly, and I don’t think it would explain the big difference between the one and 3 day average)
  2. There was some sort of glitch in the feed from NWMLS and new listings didn’t get posted for a couple days
  3. What I initially surmised:  that sellers had been waiting to see what happened with the Housing Recovery Bill and decided that since it was signed,  it was a great time to jump back into the market.

What say ye?  Any other perspectives?

→ 31 CommentsCategories: Statistics
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Case-Shiller Tiers: Spring Bounce Erased

By The Tim on July 30th, 2008 at 8:00 AM · 36 Comments

Here’s our monthly look at Seattle’s price tiers from Case-Shiller. Remember that Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Now here come the graphs. First up is the straight graph of the index from January 2000 through May 2008.

Case-Shiller Tiered Index - Seattle
Click to enlarge

As you can see, April’s spring bounce was essentially erased in all three tiers with May’s drop. The low tier dropped the least in May, but also gained the least in April, and therefore continues to set new lows. The gap between the low tier and the high tier is 9.0 points.

Here’s a chart of the year-over-year change in the index from June 2002 through May 2008.

Case-Shiller HPI - YOY Change in Seattle Tiers
Click to enlarge

All three tiers continued to extend their YOY declines in May. The low and mid tiers are well into record YOY decline territory, while the high tier is still somewhat short of its -6.74% YOY performance in June of 1991. Here’s where the tiers sit YOY as of May – Low: -8.2%, Med: -6.3%, Hi: -5.4%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers
Click to enlarge

The low tier is definitely getting hit the hardest, but the difference is not yet severe. The total decline from peak ranges from 6.6% for the high tier to 9.0% for the low tier.

(Home Price Indices, Standard & Poor’s, 07.29.2008)

→ 36 CommentsCategories: Statistics
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Case-Shiller: Let the Decline Continue

By The Tim on July 29th, 2008 at 7:00 AM · 48 Comments

Last 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 Case-Shiller Home Price Index would seem to indicate that the bust is not over yet.

Down 0.5% April to May.
Down 6.3% YOY.

Last year prices rose 0.95% from April to May, so the year-over-year figure for the index has once again set a new record as it punches through the 5% threshold.

Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. Portland actually increased again in May, but still had an over 5% year-over-year decline. Both Northwest cities continue to perform worse than San Diego or L.A. did 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.

Case-Shiller HPI: West Coast
Click to enlarge

Again I’d like to point out that this graph is not intended to be predictive. That said, it is interesting to note how closely Portland and Seattle have tracked San Diego since the first time I posted this graph just over a year ago.

And here’s the graph of all twenty Case-Shiller-tracked cities:

Case-Shiller HPI: All Cities
Click to enlarge

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.

Case-Shiller HPI: Decline From Peak
Click to enlarge

Seattle’s drop ten months off of the peak is still larger 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 1.5%, San Francisco was down 3.3%. Those cities have now seen a total decline of 29% 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.

Case-Shiller HPI: Seattle Price Reversion
Click to enlarge

Even with the month-to-month drop, May’s index for Seattle (178.67) was still slightly higher than March (178.29), so I guess we still can’t say with certainty that March wasn’t the bottom. But let’s just say I won’t be surprised to see the index drop again in June.

It is also worth noting that with year-over-year price drops now over 6%, two prominent local real estate insiders have already had their 2008 predictions proven wrong. Matthew Gardner: “For 2008, Gardner is predicting anywhere from zero appreciation to home prices falling as much as 5 percent.” Dick Conway: “Conway anticipates average Puget Sound-region home prices will decline less than 1 percent next year…”

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 07.29.2008)

→ 48 CommentsCategories: Statistics
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June Neighborhoods Months of Supply Update

By The Tim on July 28th, 2008 at 8:30 AM · 46 Comments

Here’s the latest update on months of supply, or “absorption rates” for the 30 NWMLS areas in King County. For an explanation of what months of supply means, please refer to the original neighborhood MOS breakdown post. I apologize for the tardiness, I was hoping to have the color-coded map ready by this month’s update, but no luck. You can still see a good map of these areas here though.

Remember: Over 6 MOS is a buyer’s market, which gives buyers more negotiating power, but doesn’t mean homes are priced attractively for buyers or that it’s a good time to buy. Before this year, the longest that King County as a whole has sustained a MOS above 6 was 4-5 months in the winter of 1994-1995. June MOS for King County came in at 6.04 (compared to 3.50 for June 2007), bringing the current run to ten months.

In the graphs below, you’re looking at the MOS for the “Res Only” data from the NWMLS King County Breakout pdfs for the eleven-month period of July 2007 through June 2008. The bar graph is centered vertically on 6.0 MOS, so that it is easier to visually tell the difference between a seller’s and buyer’s market (i.e. – shorter bars mean a more balanced market). Each graph again has the same scale on the vertical axis and has the King County aggregate figure plotted in red on the far right, so they can be easily compared.

[Read more →]

→ 46 CommentsCategories: Neighborhoods · Statistics
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Poll: Do you think the “Foreclosure Prevention Act of 2008″ will:

By The Tim on July 27th, 2008 at 12:11 AM · 60 Comments

Please vote in this poll using the sidebar.

Do you think the "Foreclosure Prevention Act of 2008" will:

  • Have little effect on the housing market. (51%, 111 Votes)
  • Slow the housing meltdown. (15%, 33 Votes)
  • Stop the housing meltdown. (2%, 4 Votes)
  • Inflate a new housing bubble. (5%, 10 Votes)
  • Send the country into recession faster and/or deeper. (27%, 59 Votes)

Total Voters: 217


This poll will be active and displayed on the sidebar through 08.02.2008.

→ 60 CommentsCategories: Polls
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