Falling from the outside in

One of the topics discussed frequently on this blog is the notion that prices in the suburbs are likely to fall much further and faster than prices in the urban core of Seattle. Yesterday Zillow posted their quarterly market update data. Taken from Zillow's Market Reports, August 2008I will say that while I’m ambivalent about Zillow’s “Z-estimate” feature, which attempts to predict home values – I find that as source of historical data on market trends at the neighborhood level, the site is an invaluable resource. The mapping feature on the site for the report (which uses this historical data) gives a really nice visual confirmation of the notion of prices falling in commuter zones first.

I pulled this snapshot off the site at a 15 mile granularity. It is almost as if you could draw rings around Seattle and predict the rate of the decline in home prices. No real news here, but I thought it was an interesting visual confirmation of an often discussed concept.

  

24 comments:

  1. 1
    vboring says:

    the other geographical trend is that areas that were historically cheap are the first to return to cheap via the mechanism of foreclosures which have been starting at the low end and working their way up.

    for seattle, this means the south end and the central district are the areas to watch.

    given that i would personally pay a small premium to live near the light rail (and not have to deal with buses anymore), i think those parts of the south end may not fall as much as they would have.

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  2. 2
    vboring says:

    funny how the big red diamond that indicates the fastest rate of price appreciation on the legend represents +2%.

    in areas that fall into Zillow’s fastest appreciating segment, house prices are almost keeping up with consumer price inflation.

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  3. 3
    WestSideBilly says:

    Gold Bar will be the RE agents’ next point of refuting falling sales.

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  4. 4
    AndySeattle says:

    sorry for the dumb question… Why are some squares larger than others? Is that based on reporting area?

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  5. 5
    Seeker says:

    Does anyone know when would be the initial ARM reset hit in Seattle?

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  6. 6
    deejayoh says:

    sorry for the dumb question… Why are some squares larger than others? Is that based on reporting area?

    Andy –
    I think the size of the squares refers to sales volume for the area. That would explain Seattle and Tacoma being the largest

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  7. 7
    deejayoh says:

    Does anyone know when would be the initial ARM reset hit in Seattle?

    Seeker – if you are referring to Alt-A resets, I saw this chart today that is probably what you are looking for:

    http://3.bp.blogspot.com/_pMscxxELHEg/SJ2TM6xk9FI/AAAAAAAACa4/z1O-B6zuGkQ/s1600-h/ClaytonAltA.jpg

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  8. 8

    Andy – deejay’s correct; the relative size of the squares indicates the relative number of homes included in the aggregate home value for each market.

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  9. 9
    rose-colored-coolaid says:

    First, it’s interesting that the scale goes from -20 (per quarter!?!) to +2

    Second, if prices are really falling from the outside in, does that mean Mercer Island is now the center of Seattle? I kid. Sort of…

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  10. 10

    “does that mean Mercer Island is now the center of Seattle? I kid. Sort of…”

    Not only is Mercer Island the center of Seattle, it’s the center of the world. Just ask the people who live there. :)

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  11. 11
    Groundhogday says:

    Nice graphic! That really captures what has been happening in all markets (Seattle last up to bat). For this ponzi scheme, the best houses and best locations represent the top of the pyramid. When all of the supporting blocks have been removed, the top will fall as well.

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  12. 12
    Hound Dog says:

    Does Zillow break it down by zip?

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  13. 13
    mikal says:

    Groundhog Day, that could happen. But most big cities have only seen a slight drop on the inside core. Boston comes to mind.

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  14. 14
  15. 15
    rose-colored-coolaid says:

    One other thing. Several of those regions are down 10%+ (according to Zillow) this quarter alone! Correct me if I misunderstand, but this is a quarterly update, and those are not YOY numbers.

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  16. 16
    jonness says:

    Here is an interesting article that discusses the last of the holdouts:

    http://www.lasvegassun.com/news/2008/aug/11/priciest-homes-not-immune-crunch-time/

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  17. 17
    george says:

    Speaking of urban core living, can some smart agent please explain this new listing in (or near) Ravenna? This is “close” to the aquarium? Welcome to “the city life” in Seattle? Why is it being marketed like this?

    http://www.redfin.com/WA/Seattle/5766-27-Ave-NE-98105/home/313259

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  18. 18
    deejayoh says:

    I like the Dino Rossi sign in the front yard. That’s an agent that really cares about their work, I tell you. If you get the chance, hire Vasiliy Spatarel of Newberry Realty, Inc.

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  19. 19
    obelus says:

    $367 a square foot! No wonder it is not selling. It should be half that price or less.

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  20. 20
    Lionel says:

    “Speaking of urban core living, can some smart agent please explain this new listing in (or near) Ravenna? This is “close” to the aquarium? Welcome to “the city life” in Seattle? Why is it being marketed like this?”

    I don’t know about the aquarium, but I do know this place is overpriced. I lived in a rental last year, 3 bedroom craftsman, similarly appointed, nicer in many ways, a block over, that I paid under 1700/month for. 400X rent? No thanks.

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  21. 21
    disbelief says:

    Re the Ravenna house: last purchased in 1986 for $77K!? I guess they’ve got room to move, but they won’t get anything close to the asking price. This will likely be a case where they would have probably netted more money had they not remodeled (let alone sold it a few years ago).

    This will be an interesting one to watch. Can we have a poll to predict the price?

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  22. 22
    biliruben says:

    A 3-1 1100 sq ft house in the neighborhood, similarly remodeled went for 729K last month.

    http://www.redfin.com/WA/Seattle/6051-29th-Ave-NE-98115/home/312722

    I think they have a shot of getting their price, Rossi sign and moron Realtor or no. That neighborhood is still showing strength.

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  23. 23
    B&W Nikes says:

    It’d be real interesting to see a differentiation between SFH and Condo numbers on the same kind of map. I guesstimate that centrally situated, well serviced SFHs will hold water much better than the Condos will over the next 18 mo’s. I believe Condos and other Multis are going to bleed pretty heavily across the region over the same time period.

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  24. 24
    george says:

    Lionel that is the bottom line. I don’t care if this house is equipped with a full-on transporter direct from Star Trek to get you downtown. Rentals are expensive in Seattle compared to 2006, but we’re talking $1700 a month vs. inching up to 700K? It may sell, but you’d have to be nuts. Or just really really really bad at math.

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