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.
Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:
- Low Tier: < $273,666
- Mid Tier: $273,666 – $403,681
- Hi Tier: > $403,681
The tier breakpoints broke their recent trend of inching upward over the last few months, as all three tiers saw month-to-month drops.
First up is the straight graph of the index from January 2000 through September 2009.
The low tier fell 0.6% month-to-month, while the middle tier fell 0.9%, and the high tier dropped 0.1%. The “rewind” situation held steady again, with low tier sitting about where it was in April 2005 and the middle and the high tiers at May 2005 levels.
Here’s a chart of the year-over-year change in the index from January 2003 through September 2009.
Despite the month-to-month drop, the year-over-year situation improved slightly in all three tiers, with the high tier seeing the smallest bump. Here’s where the tiers sit YOY as of September – Low: -15.4%, Med: -12.7%, Hi: -14.1%.
Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.
It’s looking more like my call for “an extended lull on the way to the real bottom” may be an accurate assessment of this summer’s apparent plateau.
(Home Price Indices, Standard & Poor’s, 11.24.2009)
House Prices Will Never Stop Going Down
As long as population density and worsening unemployment increases, with slamdunk decreases in per capita spending and wages.
Sure….we can get cash from the federal deficit credit card to slow down the train crash a bit; but without Stimulus II, Stimulus III, etc, etc until the ineviditable bankruptcy occurs soon….its a hopeless future very soon, without immediate depopulation and manufaturing in America again.
Got a better solution?
The numbers don’t lie; but it’s truly remarkable that “Mid Tier: $273,666 – $403,681″ still holds true after all we’ve been through.
Low tier down over 25% since peak; I have to believe it won’t stop until <$200K (another 25% down) or more. It could take another 24 months, who knows. The other 2 tiers will follow closely.
Yup, we’re just taking enough of a breather to let folks put on a fresh pair of “Depends” before getting on with the adventure.
LOL@Scotsman.
I can’t tell what’s going on with the high tier on the total decline (in the last dot.)
RE: Anon. @ 4 – That last high tier dot looks like ~78, essentially unchanged for six months.
The most rabid government interference, market distortion, and propaganda campaigning in world history, and that’s all they can do. When that gives out, we’ll get another gut-twisting leg down that will give the government the excuse it needs to just start setting house prices directly. We must destroy the free market to save it, Comrades.
This lull will be sustained, that’s for sure. This probably would have been the bottom of the housing market, had employment not gotten so bad. I would say that the market now depends on the weakening/strengthening of the overall unemployment picture.
I am getting impatient with my $10,000 – with the govt $8000, I want to buy a house with 18K. Tim, AMS, Scotsman, DavidL and others, can you please tell me when would I be able to buy a 5 bedroom house with a view in the Kirkland area for around 90k? You see, I want to make 20% down payment.
Please give me an exact date so I put my 10K in a fixed deposit till then.
Hoping for burn and crash so I can buy what I can afford!!!
RE: Rojo @ 7 – at the end of this presentation, you get an exact date.
http://www.ted.com/talks/hans_rosling_asia_s_rise_how_and_when.html
RE: Rojo @ 7 – Honestly I think that time will come IF, all the predicitions from everyone on every bubble forum come true at the same time. However it won’t help anyone with $10k as the bank will issue you an I Owe You.
RE: Rojo @ 7 – How fast is your $10k growing?
I’d suggest Vegas–either buy a place there, or take a chance with that $10k. If you guess right, you’ll be able to buy that 5BR place in Kirkland much sooner than later.
I had a friend suggest something like, “I have an extra $50, and my credit card balance is just under $10,000. How can I grow the $50 to pay off the full balance within the next six months?”
I suggested Vegas for her too.
How about December 2012, right after the end of the world.
Of course if a place is in poor enough condition, you might be able to buy one today, but you are likely under-capitalized to fix a place that is badly damaged.
Beyond that, the price decay may be too slow with too much variance (% of % decay) to give you an exact date.
Muckleshoot Casino isn’t that far…
http://www.muckleshootcasino.com
Nice Friday night (4pm-11pm) Seafood Buffet. Sunday buffet (4pm-11pm) includes seafood too.
RE: Rojo @ 7 –
Well the Fed just came out with their predictions and they have unemployment hanging in the 7%+ range in 2012. Personally, based on their past performance and my own analysis I think that’s optimistic. I really haven’t been able to identify and isolate the specific factors that can lead to recovery on that level. Unfortunately I think the government and Fed have committed us to a path that trends downward for many, many years. Looking at the clearance rate for existing excessive debt in the system and the deteriorating economic environment in which it has to take place 10-15 years of flat-to-down doesn’t seem completely unreasonable. This will most likely be a very, very slow recovery.
The good news is you may be able to get that house in 2013,… 2015,…. 2018?
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/24/AR2009112400389.html?hpid=topnews
By Cheap South @ 8:
How is this related to what I asked. Stuff this in your rearside if there was any racial implication!!!
RE: Rojo @ 12 – RE: Rojo @ 12 –
I doubt that was racially motivated. I found it to be an interesting talk. It gives a date of when the US economy will be overtaken, which would cause things to look a lot different than they do now. The US dollar wouldn’t be worth nearly as much, we wouldn’t be able to buy cheap stuff – in other words, crash and burn like you asked for.
I can’t see how anyone could actually give you a concrete answer like July, 2048, so it seems like that response was as good at any to answer your question.
RE: Scotsman @ 11 –
“Well the Fed just came out with their predictions and they have unemployment hanging in the 7%+ range in 2012. Personally, based on their past performance and my own analysis I think that’s optimistic.”
Remember this?
http://www.mirajpatel.com/stimulus-projections-vs-reality
We had to pass the stimulus so we could find the WMDs.
By Cheap South @ 8:
Great presentation. When I was attending UW a few years back, I was shocked to walk in the library and see that few of the U.S. students were studying, and most of the foreigners had their heads in a book . At that moment, I got the same feeling as the guy in the video. Americans truly believe they can continue to dominate the world using nothing more than a sense of entitlement and a willingness to borrow money they can’t afford to pay back. Wake up America.
I am anti-bailout. We need to suffer through real corrections so that we can cleanse the impurities from our system and set the stage for future growth. If we reach a point where we stand on the edge of a great depression, it’s because we did something wrong to get there. The pathway forward is to take our punishment, learn from it, and move forward in our dominant economic position in the world. IMO, we are selling ourselves short and playing to our weaknesses as opposed to our strengths.
Many people I know are aware we are borrowing from future growth, but they don’t care. They feel as long as they die before the pain begins, it’s the best policy. The problem is, most of these people are going to be alive and well to experience the damage they have inflicted upon our great country. At that point, I expect denial and blame shifting. And maybe that will manifest in the form of war.
RE: Cheap South @ 9 – Good video, although he glosses over some of the enormous challenges the Chinese and Indian economies face.
China – Keeping growth dialed in at a high enough rate to avoid violent revolution from a repressed population.
India – Dealing with the massive issues of overpopulation and inequality.
Plenty of truth though – the West is probably at its zenith right now.
RE: sparky @ 14 –
Glad you enjoyed it. The prediction was a joke since the date happens to be the speaker’s 100th birthday. I found the talk very funny.
Rojo – how in the world would you get “racial implication” out of that talk is beyond me. “Rojo”, as far as I know, is not Chinese nor Indian, and I don’t know your race. How does it relate to your question? You asked what I thought was an intentionally ridiculous question; and the speaker gives a similarly ridiculous answer (he obviously has a better sense of humor than you).
I am happy a few of you found the talk interesting. You can become a TED fan on facebook and receive talks every few days. They are mostly on technology; but they also touch on social issues.
RE: wreckingbull @ 17 –
I agree; but I had an interesting talk with a colleague. The difference is that most Chinese want a better life; the very poor Indians believe poverty is their calling and accept it (very low chance of revolution). The Chinese must keep the 8-10% growth going, or they will have unrest.
Does CS take inflation into account, and if so can someone explain how they do this? I don’t drive much, but it seems to me that gas has crept up above $3 again, and I no longer can afford to shop at QFC. Even if all the government heroics have managed to keep housing prices flat, it would be interesting to see what they have done compared to what a gallon of milk has done in the last 4 months. My guess is that even if prices have been flat to slightly up, value has actually decreased. Also, since I haven’t gotten a raise and I think most people are experiencing wage stagnation, affordability has only increased due to cash injections from the government.