Case-Shiller Tiers: Still Looking for the Bottom

Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

First up is the straight graph of the index from January 2000 through July 2008.

Case-Shiller Tiered Index - Seattle
Click to enlarge

Price drops have resumed in all three tiers. The low tier and mid tiers have rewound to May 2006 with the high tier performing slightly better, back to “just” June 2006. The high tier took the biggest hit in July, falling over two points, or 1.3% in one month.

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

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

The low tier is still seeing the biggest drops in terms of YOY performance, falling just over 9% from July 2007. Here’s where the tiers sit YOY as of July – Low: -9.3%, Med: -8.2%, Hi: -7.7%.

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 high and mid tiers have fallen nearly the same amount, with the low tier resuming its drop after the flat spring “bounce.” The mid tier continues to track pretty closely with the aggregate for the whole Seattle-area market.

I guess spring wasn’t the bottom after all. At this rate, the low tier is likely to drop below 10% from peak as early as next month.

(Home Price Indices, Standard & Poor’s, 09.30.2008)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

14 comments:

  1. 1
    Robert Wojciechowski says:

    I think the govt can simply pay for some of the loans in Seattle and the US. Then the prices would go up. So it all depends on the govt. If say the govt says that it will pick up the interest on all loans then prices will go up because affordability will be up.

    The only issue to worry about is inflation. But as long it is a continued trend this will stabilize at some point. No worries.

    Rate this comment: Thumb up 0

  2. 2
    Eleua says:

    This bailout is designed to bailout FOREIGN holders of real-estate based bad debt.

    Read in Section 112. It’s there. Paulson said the Administration would veto the bill if it did not include this provision.

    The US got a margin call. The Chinese are forcing us to take back not only the bad US mortgage dreck they bought with their trade surplus dollars, but take all of theirs as well.

    I’m not making this up.

    Rate this comment: Thumb up 0

  3. 3
    Jackson Wallace says:

    Your chart more or less confirms what I have noticed – that prices doubled between 2000 and 2006, meaning homes selling for 350k in skyway, tukwila, and shoreline once sold for 175k, and homes in wford, queen anne, and magnolia that sell for 600k used to sell for 300k. This is more or less par with my observations. The chart and my surfing on Windermere show that the decline has either only just begun, or wont materialize because the general influx of migrants from pricier markets will keep us from falling all the way back to 2000 levels. Lets face it, its a long fall. Not only that, the appreciation really started in 1995 with Microsofts explosion, with a hard but brief detour in 2001-2002 after 911 and the dotcom bubble. I dont know who is still paying overpaying nearly 100% for houses, but they are either idiots or smarter than those of who think prices will fall.

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  4. 4
    Bits_of_Real_Panther says:

    “This bailout is designed to bailout FOREIGN holders of real-estate based bad debt.”

    It’s true, the real reason for the sham bailout has finally come to light thanks to Brad Sherman.

    Now the big question is will the “no”s in the House show some backbone even after the Senate signs off on this gawdawful plan

    Rate this comment: Thumb up 0

  5. 5
    Demersus says:

    This is anecdotal regarding the condo sales vs. rental markets. I live in in West Seattle. For many months, perhaps as long as two years, there has been a billboard advertising “West Water Seattle” condos starting in the “low $200Ks”. Today, I noticed a drastic change in their advert:

    http://www.westwaterrentals.com

    The billboard says rents starting at $950/month.

    You’ll notice that the URL resolves to the exact same site as this:

    http://www.westwaterseattle.com

    Yeah, those rental prices are poised to rocket, ahem…

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  6. 6
    Demersus says:

    Jackson Wallace @ 3

    Just ask yourself how much the annual median family income is in those areas. Then, multiple that amount by not more than 3.5x and you’ll get your appropriate “ballpark” price-point. It’s called fundementals and at some point things will revert to that.

    Which do you think will happen first; incomes doubling or housing prices falling by 50%?

    Could someone dip a brush in the common sense bucket and hit the bell curve with a broad stroke, please?

    Rate this comment: Thumb up 0

  7. 7
    jon says:

    The section that Eleua appears to be referring to is this:

    “To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.”

    So that part only applies to foreign lenders to banks that have defaulted. That means the US is going to make good on the debt of failed banks. I assume that means failed US banks only. Given everything else, it is kind of reasonable that if we ask another country to bail out one of our banks and it fails, that we buy back the assets that were passed as collateral.

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  8. 8
    Lamont says:

    We have the global reserve currency in a global marketplace, so why is it surprising that we also have to bail out foreign holders of our debt paper when we have a systemic global crisis? If we don’t, then we just create mark-to-market losses for foreign investors which winds up hurting us as their institutions fail and we take losses on CDS contracts.

    If you don’t like all this, take a time machine back to roughly 1996 and tell Greenspan he is full of crap:

    http://www.google.com/search?num=100&hl=en&q=site%3Awww.federalreserve.gov+greenspan+derivatives&btnG=Search

    This one in particular is a classic:

    http://www.federalreserve.gov/Boarddocs/Speeches/2005/20050505/default.htm

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  9. 9
  10. 10
    what goes up must come down says:

    Scotsman you should compare the charter vs. the time when Bush has been in office and the time the Repugs controlled Congress — notice anything?

    Prices doubled between 2000 and 2006, wow imagine that?

    Rate this comment: Thumb up 0

  11. 11
    mydquinn says:

    Do you have data on Seattle proper?

    Rate this comment: Thumb up 0

  12. 12
    jason says:

    I noticed a house renting on Craigs list recently for $3500 per month. It turns out that this same home has been on the market in Medina for the past year, selling for 2,000,000. The mortgage on such an expensive home will be $10,000 to 13,000 per month. Why would anyone purchase this home rather than renting? There is no way the market will go higher in the next several years.

    The first round on Baby Boomers are retiring soon and this will be the next trend to bring the prices of homes down. No one seems to be talking about this, but I predict this will be a significant trend. Even if this large group stops buying up as they see the value of their 401K eroded, this will be a significant trend.

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  13. 13

    […] bubbly areas that have yet realize the losses ahead, notably the pacific northwest markets like Seattle and Portland. Evidence seems to indicate that the many of the loans made in these more expensive […]

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  14. 14

    […] The low tier still has the largest overall drop for every post-peak month since number nine. As predicted last month, the low tier has now lost over 10% from the […]

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