It’s time once again for our monthly update to the Case-Shiller Home Price Index. According to October data,
Down 1.4% September to October.
Down 10.2% YOY.
Down 11.4% from the July 2007 peak
Last year prices fell 0.94% from September to October and year-over-year prices were up 3.3%.
Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. Portland continues to outperform Seattle on a YOY basis, dropping 10.1% YOY in October and extending its streak to 11 months.
Note: This graph is not intended to be predictive. It is for entertainment purposes only.
Here’s the graph of all twenty Case-Shiller-tracked cities:
In October, seven of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops than Seattle (one fewer than in September). Dallas at -3.0%, Charlotte at -4.4%, Denver at -5.2%, Boston at -6.0%, Cleveland at -6.2, New York at -7.5%, and Portland at -10.1%. Phoenix took the largest year-over-year drop again, with prices falling nearly 33% in a single year.
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.
In the fifteen months since the price peak in Seattle prices have declined approximately 11.4%. This places the post-peak performance of Seattle home prices right between that of Tampa, FL and Phoenix, AZ, however the overall trend seems to be more on track with the pattern in Washington, DC.
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.
Seattle’s Case-Shiller value for October 2008 of 170.45 was just above its March 2006 value of 169.46. Prices have now “rewound” two years and seven months.
Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.
(Home Price Indices, Standard & Poor’s, 12.30.2008)
shawn » Dec 30, 2008 at 8:23 am
This suggests to me that when we see evidence that the nation’s housing mess is over, that the bottom has been met and things are actually improving, that prices have gone up for a few quarters, well that is when we know that Seattle is at its bottom, and it is a good time to buy. It is nice to be behind the curve rather than leading the pack.
tj » Dec 30, 2008 at 8:43 am
Like a long distance runner it seems like Seattle has found it’s pace of 1% decline/month. Renters are often acccused of “throwing away money” each month, well add 1% decline + the interrest you will pay each month by buying and you will endup with an amount 3 – 4 times the cost of renting. That is truly throwing away money.
pfft » Dec 30, 2008 at 9:21 am
“This graph is not intended to be predictive. It is for entertainment purposes only”
I’m starting to not believe that anymore!
Interloper » Dec 30, 2008 at 9:26 am
Shawn may be right.
Seattle is lagging the Case-Shiller “Composite 20″ cities by 12 months, which points to Seattle having the most predictable market bottom in the history of housing market bottoms. Maybe all we need to do is watch the composite bottom out and wait 12 months for Seattle to follow.
The Tim » Dec 30, 2008 at 9:30 am
The funny thing to me about the delay-shifted graph is that when I first posted it in June 2007 the latest Case-Shiller HPI for San Diego (April ‘07) was down 6.7% YOY.
The Seattle line caught up to that point on the San Diego line in my delay chart with last month’s Case-Shiller update. We were down 9.8% YOY.
So I guess it’s not predictive after all. Seattle’s doing worse than we would have expected had it followed San Diego since the first time I posted that chart.
pfft » Dec 30, 2008 at 9:40 am
“well add 1% decline”
just that will cost you $1700 a month! just saving that by renting for 18 months will save you $30,000.
consider these extra costs or savings. you don’t have to furnish a new home. you don’t have to make repairs. you don’t have to pay property taxes. while you wait what you want to buy will go down as will interest payments when you finally buy.
pfft » Dec 30, 2008 at 9:44 am
“which points to Seattle having the most predictable market bottom in the history of housing market bottoms.”
now that is a good point.
“So I guess it’s not predictive after all.”
stop being so modest buddy. you ain’t fooling us!
Alex » Dec 30, 2008 at 9:55 am
Wanna catch the market’s very bottom? Just sit tight and wait until The Tim buys a house :)
Groundhogday » Dec 30, 2008 at 10:01 am
As Tim has pointed out and illustrated, the Pacific Northwest is actually declining faster than other comparable markets relative to the peak date. I’d surmise that this is due largely to the following factors: (1) economic downturn as a result of global bust hits before the local bust effects are manifested; (2) tightening lending standards due to the leading busts in other states; and (3) market psychology has shifted faster due to national press coverage of real estate collapses elsewhere.
This is all good news for those of us who would like to purchase (at a price that makes financial sense). We will reach the bottom faster and re-establish a viable, healthy real estate market based upon home values that match local incomes and rents.
Dave0 » Dec 30, 2008 at 10:25 am
“Wanna catch the market’s very bottom? Just sit tight and wait until The Tim buys a house :)”
Ha! You’ll probably miss the bottom then. I bet Tim will still be “housesitting” when the bottom comes and will still have no incentive to start paying a mortgage since he essentially has free rent.
Scotsman » Dec 30, 2008 at 10:42 am
I don’t see any of those lines starting to even flatten out, let alone head back up. There is no bottom in sight- anywhere. Relax, write out the January rent check, plan a nice summer vacation with some of the savings. Our economy needs you to spend, and there are some great deals available! Just not in housing.
Matthew » Dec 30, 2008 at 12:56 pm
If we are following San Diego, the next 6-12 months are going to be the worst months yet.
Stay tuned.
pfft » Dec 30, 2008 at 1:33 pm
The fact that Seattle lags would be a interesting thing to know if you were trading housing futures, huh?
EastsideRealEstateAgent » Dec 30, 2008 at 1:33 pm
Good News!! Microsoft WONT be laying off 10% of its workforce after all!! Their stock went up 2% today!! That should save them the $900 Million they have been hoping to save.
Buceri » Dec 30, 2008 at 1:52 pm
The market went up over 2%. GM over 5%!!!
The housing market is saved!!!!!
David McManus » Dec 30, 2008 at 2:19 pm
I should get out there and buy then!
Big Worm » Dec 30, 2008 at 2:42 pm
Is there a rent vs. buy calculator somewhere? I know there’s an article on the site that deals with this subject, but that only calculates down to a -2% drop in real estate prices… and the 11% stock market return is a bit outdated as well.
It would be nice to be able to fill in current interest rates, change the alternative investment rate to like 3.5% for a CD, and drop the annual depreciation down to -12% or something.
Slumlord » Dec 30, 2008 at 2:49 pm
You could always rent a place that already has your name on it, the McManus mansion. I’m not kidding, I jogged by it the other day and there was a for rent sign up. (Though I’ve met the owner, and he really is a slumlord.) Here is the assessor’s photo.Reply – Quote
Slumlord » Dec 30, 2008 at 2:52 pm
I messed up the link. Here is the long version: http://web5.co.snohomish.wa.us/propsys/Asr-Tr-PropInq/PropInfo05-StructData.asp?parcel=00516858202700&lrsn=1121255&Ext=R01&StClass=Dwelling&Yr=1895&ImpId=D&ImpType=DWELL%20%20%20&StType=2%20Story%20w/Basement
hzg » Dec 30, 2008 at 2:58 pm
The story in the link below seems to forecast big news from Microsoft. Can anyone confirm this?
http://www.geldpress.com/2008/12/seattle-housing-microsoft-layoffs-and-mortgage-walk-aways/
WontBuy » Dec 30, 2008 at 3:17 pm
You guys do realize, of course, there is no way a bottom would be predictable. What will happen is within the next few months, Seattle will quickly catch up with the gang.
obelus » Dec 30, 2008 at 3:46 pm
Microsoft must cut back one way or another. A third of their revenue is from Windows (Vista was a bust), a third from Office (2007 was a bust). The latest versions of their two biggest cash cows have done terribly where it counts, in the business marketplace (also, cut backs coming to businesses everywhere; less licensing for MS products new and old).
Joe » Dec 30, 2008 at 5:57 pm
@17, This one is pretty nice:
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#
jonness » Dec 30, 2008 at 8:36 pm
OK all you gloom and doomers. Here’s proof that we finally reached the bottom:
http://www.blip.tv/file/1528079?
jonness » Dec 30, 2008 at 9:04 pm
During the Great Depression, there were a lot of sucker rallies and large gainers that were followed by even larger crashes. That’s how these things play out. Smart financial advisers recommended their clients use these rally points to sell. Here is an interesting analysis where Harry Dent recommends a similar course of action (I’m posting in regards to bottom calling):
http://www.youtube.com/watch?v=r9A_bIEfM1g&eurl=http://www.tickerforum.org/cgi-ticker/akcs-www?post=76669
jonness » Dec 30, 2008 at 9:06 pm
Sorry, here is the link:
http://www.youtube.com/watch?v=r9A_bIEfM1g&eurl=http://www.tickerforum.org/cgi-ticker/akcs-www?post=76669
singliac » Dec 30, 2008 at 9:50 pm
I wonder how far prices have rewound when factoring in inflation. Anyone care to look it up?
Andy » Dec 31, 2008 at 12:06 am
This market is dead; good riddance…
I love hearing my colleagues tell me that they coould not afford the Bellevue homes they live in – if they were to buy them today. What a crock!
BURN BABY BURN!
Lets get to a sane economy; not a housing bubble. Another wonderful dialogue from Mr. Schiff. Watch this video and let me know your thoughts.
http://www.europac.net/Schiff-Bloomberg-10-28-08_lg.asp
Andy » Dec 31, 2008 at 12:25 am
By the way, the Gig Harbor Homes I am watching are falling apart – homeowners are running like roaches – dropping prices or just taking them off the market. Many are defaulting b/c they were sure they would scam some other idiot (paying 40% more for a depreciating asset). Gig Harbor is doomed – freaking mill rate + assessments are a joke too. Too bad the idiot lazy lumberjacks with huge beards cannot afford the taxes. Haha..
Another great article on WAMU – Seattle’s stupid neighborhood bank – full of guys with beards and EMO’s (loaded with missing ear lobes and make-up) working as tellers. What a joke – Seattle is too forgiving to miscreants. You should toss these preverse cultures (that seem to develop here) into the Puget Sound. Just walk near Pike place – they are all smoking dope nearby.
Please check out the following “GREAT” New York Times article; will explain everything about this Pacific Northwest Roach Motel + overpaid shamucks that infest King County. Considering how lazy people are here; there will be many more defaults and company failures. By the way, Puget Sound Energy was sold. For all my fellow bubble preveyors, the housing collapse is coming soon. May all of you maximaize your ability to get what YOU want! Not what some uneducated Real Estate Broker tells you…
http://www.iht.com/articles/2008/12/28/business/wamu.php
Sorry for my rant; had a good time at happy hour…
Mama » Dec 31, 2008 at 5:58 am
Does anyone find the graph really interesting with respect to the “world-class city” debate we had about Seattle a while ago. It strikes me that the graphs for NYC and Boston are pretty different from the rest…despite the fact that they’ve seen fairly heavy layofffs in the financial industry
Angie » Dec 31, 2008 at 8:02 am
Mama, that’s a great observation. Interestingly, Seattle’s exactly in the middle between the two major trends on that graph. It appears to be on track with the trends of the Miami to DC group, but has seen much less decline than those cities, only as much as NYC and Boston (though in a shorter time). And can you really say that SF and DC aren’t “world class”? Not to mention San Diego, the Gold Standard by which Seattle is measured here on the Bubble.
Sadly, I don’t think this data set will resolve that dispute.
Andy, my friend, your obsession with beards is getting a little out of hand. Just sayin’.
AndySeattle » Dec 31, 2008 at 8:14 am
Andy can’t grow a beard… and is making a bad name for us real Andys
crispy&cole » Dec 31, 2008 at 9:20 am
MSFT to layoff 15,000?:
http://www.layoffdaily.com/
http://www.trustedreviews.com/software/news/2008/12/30/Microsoft-Planning-To-Lay-Off-17–of-Staff/p1
http://www.fudzilla.com/index.php?option=com_content&task=view&id=11142&Itemid=1
crispy&cole » Dec 31, 2008 at 9:27 am
Why did I get deleted? I was responding to a few questions above about MSFT layoffs.
crispy&cole » Dec 31, 2008 at 9:28 am
nevermind…my bad ( I see it know)
BubbleBuyer » Dec 31, 2008 at 10:07 am
I feel this blog’s focus on housing really misses the big picture which is the death spiral the US economy is in and has been in for the past decade or so. The housing collapse is only a symptom of a cancer that will result in the decline and collapse of the USA. We have nobody to blame but ourselves for this. We elect incompetent corrupt senators, congressmen and presidents that are owned by special interests both domestic and international. We continue to live way beyond our means, saddling future generations with immense amounts of debt so that we can continue to buy flat screen TVs, drive yank tanks and buy cheap low quality crap from China.
We as a country are adhering to a trade policy of free trade that is structurally flawed, generating massive trade deficits on a daily basis. You cannot enact environmental, labor, minimum wage and financial legislation that US companies are forced to adhere to while allowing Chinese companies to employ slave labor, destroy the environment and manipulate currency to maintain favorable trade dynamics. Any rational business sees the opportunity for labor, environmental and financial arbitrage by eliminating work in the USA and shifting it to Chinese sweatshops. The elimination of good paying jobs results in a bifurcated society. The few lucky enough to make bank for the time being and the rest, flipping burgers or real estate or whatever the latest bubble asset is to get by. The steady state is reached when wages in third world countries approach equalization with those of the USA.
The result of our idiotic trade policy? A $28 billion a month trade deficit with China. An overall trade deficit of $57.2 billion generated monthly or $684 billion annually! That means that every year, the USA borrows this amount from China, Japan and Germany plus more to finance payments on the existing debt. Your share of the total debt owed increases by $2,280 a year. Let’s leave out the budget deficit spending our government embraces for the purposes of this rant. Currently, every man, woman and child in the USA owes in the vicinity of $38,000 which will have to be paid back at some point. Pile on top of that the average credit card balance of the average American family of around $10,000 and try to determine the odds that we can pay this back. You do the math on that. We are all sub prime borrowers or worse and housing is the least of our problems.
Ask any politician about this and their plan for future economic prosperity and you will get a blank stare. They simply are not smart enough lack the basic economic background to comprehend the enormity of the situation or are beholden to foreign / domestic special interests. The approach we seem to be currently embarked on is to keep borrowing at the idiotically low interest rates the morons in China are willing to lend to the USA at. At some point, these idiots will wise up and stop buying newly issued debt enabling us to make interest payments on the existing debt. Then, our only out is to pay the debt back with inflated dollars. i.e. print more dollars. The result, a massive shift out of dollar denominated assets – debt, equity, hard assets – resulting in the collapse of the US dollar, horrific inflation and a complete collapse in the standard of living in the USA.
In the end, we have nobody to blame but ourselves. Who was it who said “it is hard to overestimate the stupidity of the American people”….I am sure it was a well regarded politician.
Happy holidays.
cm » Dec 31, 2008 at 10:27 am
Tim,
Wouldn’t comparing different markets decline from peak be skewed by the Start of the credit crisis in Aug 07?
MacAttack » Dec 31, 2008 at 10:49 am
By the way: You win!!!
A google search of Seattlebubble brings up this dead blog (last entry July 29, 2008). I guess they ran out of convenient actual facts.
SeattleBubble?
This is a forum for posting actual facts about the Seattle area real estate market.
B&W Nikes » Dec 31, 2008 at 10:53 am
Sans pogonophobia and general loathing of your own backyard (are you a native?), that’s a great IHT article, thanks Andy.
After the tabloid style lead up with references to methamphetamine use, petty thefts, and mariachi singers (how David Lynch!) is this nugget in the closing:
Anyone else find the absence of regulators over the last decade as alarming as the sudden seizures and takeovers?
For the Seattle area, historically it seems whenever this region gets economically slapped, the crappy times are followed by increasingly longer and larger waves of new people and businesses arriving. The further we sink the more we rise on the rebound, we are a boom and bust cycle town. For a medium size young city people seem to really like living here regardless of the economics. Likely that the problems of the WaMus, MSFTs, and Boeings will open up a lot of commercial opportunities for other parties, but it will be uncomfortable and we will feel quite a pinch.
Dave » Dec 31, 2008 at 11:04 am
“You guys do realize, of course, there is no way a bottom would be predictable. What will happen is within the next few months, Seattle will quickly catch up with the gang.”
For Seattle to “catch up” we’d need to post declines at, say, a 30% annual rate for awhile.
Buceri » Dec 31, 2008 at 1:13 pm
BubbleBuyer; this one is for you:
http://www.youtube.com/watch?v=OqZMTY4V7Ts
Lake Hills Renter » Dec 31, 2008 at 3:31 pm
“pogonophobia”
Hah! I had to look that one up. I can’t believe that actualy exists, and is extremely relevent around here of late.