Posted by: 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.

41 responses to “Case-Shiller: Seattle Home Prices Hit New Post-Bubble Low”

  1. AndySeattle

    Still irritated that congress pushed the homebuyer’s tax credit through April 2010. I expected it, but am disappointed with it. I really wish that money would have gone somewhere else. Corporate R&D tax credits? Additional college tuition assistance? Even nowhere would have been better.

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  2. Dave Anderson

    Virtually every city lost pricing momentum in September as the first-time home buyers tax credit began to lose steam. Sometime between now and the final expiration of the tax credit, national home prices will resume their decline.

    If the loss in home equity is big enough, it will trigger a W-shaped recession.

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  3. Cheap South

    Also consider the credit might have peaked. Anyone that wanted to take advantage of it, they already did in the first rush before the previous deadline. It might not be a game changer in the next 6 months.

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  4. Snigliastic

    What I want to know:
    what is the argument to buy a house now? House prices have been falling for quite some time now, and people are stupid (after all, “Going Rogue” hit number one). I image at some point, dumb people will be buying houses, bidding up prices again, before they crash once more. If this occurs, I wonder how long the trough-peak-trough will take. I plan on buying in the next year or two, and don’t want to see prices shoot up for two years based on pfft-driven dumbness, then buy, then have prices plummet again for the next several years.

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  5. johnnybigspenda

    RE: Snigliastic @ 4

    dumb buyers are buyers too!

    there are many sellers just praying for your scenario to come true… dumb sellers?

    its kind of the same phenomenon that made the DOW go from 6500 to 10,000+… if you believe that fundamental valuations have improved by 60%, I have a nice house to sell you as well

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  6. Ray Pepper

    what is the argument to buy a house now?

    Well, I was just told yesterday by my client, closing in Bellevue, that his new home will be a great place to plug in his new 197.00 HP laptop!

    http://www.bestbuy.com/doorbusters2009/?AID=10597222&PID=1234320&URL=http%3A%2F%2Fwww.bestbuy.com%2Fdoorbusters2009%2F&ref=39&loc=01

    I reminded him he can also plug in his new 32 in 267.00 LCD’s.

    http://www.blackfriday.info/sales/target-black-friday-ad.html

    Get up early everyone!

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  7. AMS

    RE: Ray Pepper @ 6 – I remember the days when many sellers were offering free Flat Screen TVs as an incentive to buy an overpriced place. I haven’t seen that as much as of late.

    Why spend a few hundred on a TV when you could spend a few hundred thousand on a home.

    Maybe Walmart is the wrong place to look for a new TV?

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  8. AMS

    “Here’s a complimentary chart to that last one.”

    Thanks for the FREE extra chart!

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  9. AMS

    RE: The Tim @ 9 – I thought you added an unpaid intern… lol

    By the way, there is some problem with that complementary chart. “Percent March 2009 Value,” maybe? March was not a peak, was it? What peak value are you using?

    (Now that it’s no longer free, I expect more! lol)

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  10. Read it and Weep

    Suprise!!! t on Tue, Nov 24th, 2009 at 9:52 am | 7 views | rss | email this | add comment
    Economic rebound not as strong
    The first revision of gross domestic product (GDP) for the third quarter shows slower growth than initially thought.

    No really! Stop laughing! I freakin Serial!

    NEW YORK (CNNMoney.com) — Economic growth was weaker in the third quarter than originally reported, according to government data released Tuesday.

    In other xxxxking words, THEY LIED!!! That’s right it was that little tid bit fib, back in Late September early October that recreated about 20% of fictitious values in Real Estate homes went from 150K to 259 – 300K in just this short time since these artful fibbers started their chocolate in late Summer.

    The gross domestic product, the broadest measure of the nation’s economic activity, rose at an annual rate of 2.8% in the three months ending in September, according to the Commerce Department’s first revision of the reading. The initial reading of the report a month ago came in with a 3.5% growth rate.

    The decline in the growth rate was expected, in large part because of a recent report showing a growing gap between the nation’s imports and exports. Importing goods from other countries is a drag on domestic U.S. growth.

    In other words Screw you for being that golly gullible, can’t you see the rain?

    The recession may be over — but not officially: The third quarter snapped a streak of four straight quarters during which the nation suffered the most severe economic decline since the Great Depression. And there is widespread consensus among economists that the recession likely ended at some point this past summer.

    “There’s no place like home home” [click click]
    “There’s no place like home home” [click click]

    Even many of those who think that a double dip will be avoided question how strong the recovery will be. Federal Reserve Chairman Ben Bernanke said in a speech last week that the economy is facing headwinds that will stop growth “from being as robust as we would hope.”

    I’ll never look at an ice creme cone the same way again.

    You know what this story need? More bogus positive forecasts.

    Higher GDP doesn’t mean more jobs: Top economists recently surveyed by the National Association of Business Economics forecast GDP growth of 3% in the fourth quarter and a 3.2% rise in economic activity over the course of 2010.

    But they have pushed back their estimates for when economy will start adding jobs again until the second quarter of next year. The nation’s unemployment rate hit 10.2% in October

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  11. AMS

    RE: The Tim @ 11 – What peak value is being used?

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  12. Matsayswhat

    RE: Cheap South @ 3

    Maybe, but keep in mind they added the $6500 for existing home owners that become buyers. I’m sure there are more than a few people that had been grousing about not getting free money that will now attempt to get there own.

    I find it super interesting that in the “Bounce since March” graph San Francisco is up almost as much as L.A. is down and Seattle is relatively flat. Sometimes when I read these graphs I feel the same sense of morbid curiousity that occurs when driving by a car accident.

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  13. WestSeattleDave

    RE: AndySeattle @ 1 – Andy — Not only does the tax credit expire, but the Federal Reserve has announced that they are slowing down and extending their support of mortgage rates until the first quarter of 2010. So come spring, I expect that demand will drop from both the expiration of the tax credit and the increase in mortgage interest rates due to the end of the Fed’s actions. It’s the beginning of the next leg down.

    Quite the double Whammy!

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  14. AMS

    RE: Matsayswhat @ 14 – “I find it super interesting that in the “Bounce since March” graph San Francisco is up almost as much as L.A. is down and Seattle is relatively flat.”

    That’s Vegas, not LA. LA is up 4-5%.

    Also note that SF is down much more from its peak than Seattle, even with the bounce since March.

    Why does Vegas continue to fall?

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  15. Ray Pepper

    RE: AMS @ 7

    Flat screens as an incentive? Thats nothing. In Reno and Carson City 4 years ago when the mkt began to cool they started with Toyota Camry’s (base models) then they progressed to BMW’s, then after that (1 year later) they all became foreclosures. So it appears some of these owners are still driving their Camry’s and BMW’s while the house is no doubt long gone.

    Ahhhhhhhh. memories!

    There was never enough time for the TV stage. They jumped right to the cars.

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  16. AMS

    RE: WestSeattleDave @ 16 – Did you notice the pair of recently listed WS homes I wrote about in the open thread? AMS @ 19 WS Homes Any thoughts?

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  17. AMS

    RE: Ray Pepper @ 18 – RVs would have been better, given the end result.

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  18. AMS

    The Tim-

    Could you redo that complementary graph, but

    1. Set March 2009 = 100. (Which it already is)
    2. Include the months before March 2009 from the above graph.
    3. Align March 2009 for all cities. (Which already are)

    In other words, add a bit of history to the left.

    For example:

    http://dshort.com/charts/bears/road-to-recovery-large.gif

    But with a bit more history. It would be a “rally from March 2009,” but the perspective of how far down some areas are would be included.

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  19. Mikedudical

    The two biggest bellwethers to watch are the Housing sector and the Auto sector. Both of them are recipients of obscene amounts of Government money but it’s not working. If you track repossessions and foreclosures (see http://www.repofinder.com) it’s obvious that the industries are still bleeding to death and the ‘economists’ are full of hot&brown. Until housing and auto prices stabilize, we are a long way out of this quagmire.

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  20. Matsayswhat

    RE: AMS @ 17

    GAH you’re right! And they even have diffirent shapes for the color blind! (which I can’t even use as an excuse anyway).

    Vegas still going down makes sense though. I mean, in this economy, how many people are planning a non frugal vacation? A lot less than are planning a “staycation” I’d bet. And with companies keeping things tighter I’m sure there is a drop in attendance at conferences… All of it adds up to hurt their market.

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  21. AMS

    RE: The Tim @ 23 – Yes. Let’s just assume that March 2009 represents the low point (I didn’t check the composites, but if not perfect, March 2009 is probably close enough). The current graph shows the recent data nicely, but it’s not put in perspective.

    There are all these claims about the market has bottomed. These are not my claims, but, ok, let’s assume that’s true. By including the history, we can see just how far up the market is relative to how far from the peak it is. I’m not suggesting that the market is going back to the peak any time soon, but some people purchased at the peak, and some of those people still ‘own’ their homes, generally subject to a lot of debt. Sure SF is up 14-15% since March, but it’s also down 35% from the peak, and the gains seem to be slowing.

    Also the first-time home buyer credit starting showing up in CS data in about March, considering the lag and averaging. I didn’t compute this precisely, but there is some lag and averaging.

    I have to say, however, that I am concerned that even with the tax incentives, the housing price increases seem to have slowed. This may be part of the seasonal nature of housing, but when free money is being handed out to those who don’t understand the larger market, it seems there are plenty of takers.

    If someone were going to draw trend lines on the Total Decline From Peak graph, I don’t see how anyone could suggest that the bottom has hit.

    The changes from August to September:

    11 areas up
    9 areas down

    The weighted average of the increases is larger than the decreases, but two cities recorded losses over 1%.

    For the Seattle area it appears that the losses have slowed significantly.

    Are we at the bottom?

    I am sure we are at the bottom if the government keeps pouring money on housing in the form of tax credits. Who knows, maybe the $15k credit is next, or possibly the $25k credit, for all buyers, of course. Maybe the government will mandate free loans for everyone? It’s tough to understand the wisdom of Congress. We have the best government that money can buy.

    Absent Dumpsters of cash being dumped into housing, I expect further price erosion. Even with Dumpsters of money burning in the back alley, Kevin Todd Swalwell style, things do not look good for those who expect a return of the bubble.

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  22. AMS

    RE: Ray Pepper @ 18 – And now there are $8k & $6.5k tax credits. At least the seller need not worry about procuring the incentives…

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  23. AMS

    RE: Matsayswhat @ 24 – In light of $8k giveaways, I find it disturbing that the price reductions in Vegas continue at such a high rate.

    Put differently: Vegas had been hit the hardest before the tax credit, and yet it continues to perform the worst.

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  24. WestSeattleDave

    RE: AMS @ 19 – AMS — half-a-mil for a fixer…what else can I say. As for the other house, at $437K, it not at all an entry level house for a first time buyer. A family at the median income for Seattle could not afford to purchase this house without a nice chunk down.

    I live about a dozen blocks from both these houses, and most of the homes in these neighborhoods are 50-70 years old and in various stages of upgrade. They tend to be small, but solid, with “good bones”. The second house is only 35 years old, but it is small in that it stuffs 3bd/1ba in the upper 1000 sqft. But a big playroom and utility areas in the lower 1000 sqft. And there is no garage.

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  25. Teacher_Greg

    Here is some more good news…

    http://s.wsj.net/public/resources/documents/info-NEGATIVE_EQUITY_0911.html

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  26. Scotsman

    Coming in 2012- free houses!!

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  27. AMS

    RE: Scotsman @ 30 – Is that before or after the end of the world?

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  28. AMS

    RE: WestSeattleDave @ 28 – What I cannot get over is that the lower priced place, at 1,000 square feet, with the utility room, looks like an average place. Older, but appears to be in good repair. Nothing special. It’s not really big. It’s not small. No special view. The neighborhood is fine–I don’t know of any major problems in that area. I guess it has 2 baths, which does separate it from the many 1 bath homes in the area. It’s close to the WS Bridge, which is nice, I suppose, but that makes it a bit far from Alki. $437,000 for an ordinary home in the area. That’s 10 years of $43,700 net income, without interest. For how much would would the house rent?

    We’re not in Kansas anymore, Toto.

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  29. Ira Sacharoff

    RE: AMS @ 32

    That house isn’t too far from the Junction, which is also a reason for it’s high ish price. It could probably rent for something like 1700-1800 per month….
    And, even though it might be a bit overpriced, how much would that house cost in Ballard?

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  30. AMS

    RE: Ira Sacharoff @ 33 – Both are just outside of the Junction, but it’s close to that little “triangle” portion of the Junction.

    At $1,700-1,800 per month, the purchase price-to-annual rent multiple is about 20, which is the going rate. Also I should say that homes like that one do sell for about $400k in the Junction area, and nearby. The second bath makes a big difference in price.

    How about the $500,000 place that is only a shell?

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  31. shawn

    RE: AMS @ 31 – That’s the either/or fallacy. I want mine during the end of the world, not before, nor after.

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  32. AMS

    RE: shawn @ 35 – I had to look up how long it will take for the world to end. One day.

    According to a quick Google search, the day is either December 21 or 23, 2012.

    This site has a countdown timer to the second:

    http://www.adishakti.org/mayan_end_times_prophecy_12-21-2012.htm

    “During the end of the world” won’t be too long if it’s computed down to the second.

    Free homes for all on December 25, 2012–after the end of the world.

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  33. Ira Sacharoff

    RE: AMS @ 36

    How will real estate agents advertise then? Armageddon specials? Don’t worry about that 30 yr mortgage, the world won’t be around?

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  34. AMS

    RE: Ira Sacharoff @ 37 – Remember Y2K?

    haha

    I had one person who actually believed that water would flow backwards, so as to shut down all hydro plants. He was convinced that the end was coming. When I suggested there were some very old hydro plants that do not rely on modern controls, I had him convinced that the rivers would flow backwards. Armageddon!

    There were those who ran their credit card balances up during 1999. Time to party. They thought the balances would suddenly disappear. Sorry.

    Maybe if you get the right person, he’ll buy at any price, thinking the majority of the loan won’t need to be paid back… After 2012, all debt is gone!

    On the other hand, maybe 2012 is why homes are not selling today? idk.

    Just for that, I am going to turn my radio to Coast to Coast AM!

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  35. Herman

    By Ira Sacharoff @ 33:

    how much would that house cost in Ballard?

    Irrelevant, because Ballard sucks.

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  36. Kary L. Krismer

    What happened to the Excel version of the data? I can’t seem to find it anymore. Google used to pop right to it, but not anymore.

    The only number I’m getting is a PDF which says Seattle came in at 148.94. August was 149.54. I’d like to see the Excel sheet to make sure I’m comparing the right numbers.

    Missed in all this reporting is how flat Seattle has been since March.

    149.03 March
    149.38
    148.96
    149.53
    149.44
    149.54
    148.94 October

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  37. Jonness

    RE: Snigliastic @ 4 – “and people are stupid (after all, “Going Rogue” hit number one).”

    LOL!

    Thanks :)

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