Comparing Four Measures of Seattle Home Prices

Since we frequently pull our home price data from a variety of sources, once in a while I like to bring them all together for a comparison.

Here’s a look at the NWMLS King County SFH median, Radar Logic‘s price per square foot, the FHFA purchase-only index, and Case Shiller‘s home price index. Each measure has been indexed to Q1 2000 = 100 for easier comparison:

Seattle-Area Home Prices: 4 Indices - Q1 2000 = 100

As of the latest data (Q4 2009 for all but the FHFA index), the four indices are off between -16.5% and -25.2% from their Q2 2007 peaks. The price per square foot, FHFA, and Case-Shiller index all hit their lowest post-peak values in their latest data, while the raw median is up 4% from the Q1 2009 low.

Here’s a look at the year-over-year change in the four indices over the same time period:

Seattle-Area Home Prices: 4 Indices - year-over-year change

I’m pretty sure that the recent divergence of the FHFA data from the other indices is due to the fact that it is based only on Fannie & Freddie-insured mortgages, which excludes jumbo loans (a relatively large percentage of the Seattle market, at least until the bubble burst).

Another fun dataset to play around with is Zillow’s “Local Info” pages, which lets you break the data down by city and compare multiple cities on the same chart, plus you can view other interesting data, like the percentage of homes sold for a loss.

Homes Sold For Loss
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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.

29 comments:

  1. 1
    DefineTheBox says:

    So many will look at the YOY charts and interpret that we’ve hit bottom. I do not believe that is the case; the rate of decline has just slowed. I think it will stay in negative YOY territory until at least spring 2012. And for a while after that it will be essentially flat and still losing ground to general inflation probably for at least 5 years. Essentially, I believe we’re in the “overshot” of the down-side correction and it will take a while for the economy to recover enough for things to “re-zero” and begin a rational appreciation curve. I know the average American is considered short-sighted, but me thinks the past few years has changed some attitudes on a societal level that will (read should) change attitudes for at least a few generations.
    On a side note, who believes that a corporation should be extended the same rights as a living human being?

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  2. 2

    RE: DefineTheBox @ 1

    Tell That to the Supreme Court

    When the Conservative Judges ruled 5-4 against We the People on continuing “Corporation Monetary Control” of our elections.

    http://blog.seattlepi.com/miltpriggee/archives/193440.asp

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  3. 3
    pfft says:

    By DefineTheBox @ 1:

    So many will look at the YOY charts and interpret that we’ve hit bottom. I do not believe that is the case; the rate of decline has just slowed.

    I bet a lot of people thought that the housing market had not topped when the rate of increase just slowed. it slowed to a negative.

    that chart says you could have YOY gains by this summer…

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  4. 4
    singliac says:

    RE: pfft @ 3

    Sorry, but that chart doesn’t say anything about this summer.

    Rate this comment: Thumb up 0

  5. 5
    AMS says:

    RE: singliac @ 4 – I’ve suggested it in the past, and I’ll say it again. I often wonder how some people think.

    “that chart says you could have YOY gains by this summer…”

    Crap like that makes me laugh.

    As if the chart is in full control of the market. It’s not humans that make pricing or purchase decisions, but rather, it’s charts. Charts shall rule the world! Just ask a chart! It’ll let you know who is the boss.

    I am sure we will have an entire chart hierarchy. Some charts will be more authoritative than others. In case of a chart dispute, we will have chart court.

    Charts will have more rights than humans, who are often wrong.

    Too funny.

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  6. 6
    singliac says:

    RE: AMS @ 5

    I’m not sure what you’re getting at. Maybe a chart would help. :)

    Rate this comment: Thumb up 0

  7. 7
    CCG says:

    Charts are great at showing where you’ve been. Fundamentals are better for telling you where you’re going. (Speaking as someone who tried for years to trade off charts.)

    Rate this comment: Thumb up 0

  8. 8
    EconE says:

    Meh.

    Does anybody remember the old charts before they were changed to a Y2K starting point?

    Back that data up another 7 years and you’ll see where the bubble starts (1997) with the dot-com money that hit the scene at the time, but is absent today.

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  9. 9

    Charts MIGHT tell you a little about the future when it comes to fast moving highly liquid markets like the stock market. And even then they’re often wrong. The real estate market is neither fast moving or highly liquid.

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  10. 10
    mukoh says:

    By Kary L. Krismer @ 9:

    Charts MIGHT tell you a little about the future when it comes to fast moving highly liquid markets like the stock market. And even then they’re often wrong. The real estate market is neither fast moving or highly liquid.

    I think Kary hits it on the head.

    I like the chart, thanks to The Tim for providing it. Good work.
    I don’t think it shows anything going forward only shows what has occured and making any conclusions based on that is up to anybodys own risk and ability to bear it.

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  11. 11
    pfft says:

    By Kary L. Krismer @ 9:

    Charts MIGHT tell you a little about the future when it comes to fast moving highly liquid markets like the stock market. And even then they’re often wrong. The real estate market is neither fast moving or highly liquid.

    real estate prices exhibit some pretty good momentum. whichever way they are going is the way they are likely to keep moving.

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  12. 12
    Hugh Dominic says:

    AMS and I didn’t finish our conversation about how to define a bottom, but suffice to say I think the bottom was last Spring. If you want a house, you can buy one now with confidence that your asset value will be stable for a typical (7 yr) holding period.

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  13. 13

    RE: Hugh Dominic @ 12

    Tell That to the Mirades of Seattle Home Sellers

    That drastically reduced prices since last Spring to unload ‘em…LOL

    Rate this comment: Thumb up 0

  14. 14

    By softwarengineer @ 13:

    <Tell That to the Mirades of Seattle Home Sellers that drastically reduced prices since last Spring to unload 'em…LOL

    I’m not going to jump in on the bottom argument, but I would point out that a reduction in price doesn’t show a reduction in value.

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  15. 15
    Herman says:

    RE: softwarengineer @ 13 – Try telling buyers from last Spring that they’re under water now — they’re not.

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  16. 16
    altt says:

    Why prices are not coming crashing down as you smart guys predicted. All right, it came down 25% after a run up of over about 100% in less than 10 years. Those who bought and holding on are still ahead. What other investment has performed this way? Real Estate is still going to beat stocks and bonds even if you buy at today’s prices. A minimum of 10 years holding is required.

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  17. 17
    pfft says:

    By AMS @ 5:

    RE: singliac @ 4 – I’ve suggested it in the past, and I’ll say it again. I often wonder how some people think.

    “that chart says you could have YOY gains by this summerâ�¦”

    Crap like that makes me laugh.

    As if the chart is in full control of the market. It’s not humans that make pricing or purchase decisions, but rather, it’s charts. Charts shall rule the world! Just ask a chart! It’ll let you know who is the boss.

    I am sure we will have an entire chart hierarchy. Some charts will be more authoritative than others. In case of a chart dispute, we will have chart court.

    Charts will have more rights than humans, who are often wrong.

    Too funny.

    what is there about “could” that you don’t understand? the chart is a reflection of the market. right now based on trend lines the housing market could go positive during the summer on a YOY basis. obviously we have to watch sales, inventory and affordability.

    we also should note that when the YOY numbers peaked it took 2 years for the numbers to go negative. if the same were to happen in reverse the first YOY positive numbers could be posted around the spring of 2011.

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  18. 18
    EconE says:

    Bottom? Bottom you say?

    When the majority of the listings are a bunch of 2006-2008 purchases listed at MORE than they paid, we are far from a bottom. In fact…we’re still in the denial stage.

    Not really surprised.

    Besides, it’s those pesky option-ARMs that need to be flushed out of the system like a loose bowel movement.

    Subprime may be “behind us”…but that was chump change.

    Enjoy your reCASTs folks.

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  19. 19
    mukoh says:

    RE: EconE @ 17 – EconE, don’t get me wrong recasts are a portion. Not as big as you might think though. Lets say a loan was a 3 yr ARM 5.5% when it started. If it were to recast today it would recast to 5.25%. Until index rates bump up to recasting these to 7% then its not really that big of a potion.

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  20. 20
    BillE says:

    By pfft @ 3:

    I bet a lot of people thought that the housing market had not topped when the rate of increase just slowed. it slowed to a negative.

    that chart says you could have YOY gains by this summer…

    Remember that any improvement you see has come during massive government intervention in the housing market, which is scheduled to end before summer. And the only form of improvement there is that the declines lessened. All measures still show greater than 5% declines.
    Extremely low rates, giving $8k to new buyers and $6.5k to move-up buyers, continued subprime loans via FHA, and prices are STILL FALLING. Every one of those is scheduled to change this spring.

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  21. 21
    AMS says:

    Vegas

    I’m looking at this data set:

    http://www.housingtracker.net/asking-prices/las-vegas-nevada/

    Median asking price:
    $345k – April 2006
    $325k – April 2007
    $257k – April 2008
    $153k – April 2009

    July 2009 – $146k
    October 2009 – $142k
    January 2010 – $137k

    Yes, the asking price reductions have slowed, but–

    but, what about all those who thought they were wealthy in 2006, 2007?
    Those who thought prices would bounce back in 2008?
    How about the many who were impacted in 2009?
    Now that we are much closer to zero, and have reduced asking prices in excess of 50%, is it any surprise that the price reductions have slowed?

    Is it any surprise that the losses have slowed with lower prices when the Tax Man pays $8k or $6.5k to so many to buy?

    Does this suggest that there will be significant price increases in the future? If so, there’s a buying opportunity in Vegas!

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  22. 22
    DefineTheBox says:

    pfft reminds me of a guy from Ballard who used to proclaim that we’d be in positive territory by about two years ago. What happened to that guy anyway? Does anyone remember his name?

    He’d proclaim this and that, and we’d all try to respond with common sense, but in the end he just went away, wrong.

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  23. 23

    RE: AMS @ 20
    Not sure I’d want to gamble on buying property in Vegas right now. Though it certainly would appear to be less risky than it was 2-3 years ago.

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  24. 24
    DefineTheBox says:

    I’ve considered moving to Vegas and staying just a few years, just for a change from the rain. I bet it’s easy to find a really nice rental there….

    I’m in the process of moving to Tacoma, incidently, to attend UWT (I’m over 40 BTW) and it was really fun to search for rentals because the market is flooded. Each place where I looked seriously dropped the price before I even attempted to negotiate.

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  25. 25
    David Losh says:

    Until the 1960s residential housing units were a complete after thought to the Real Estate Industry. If you owned “property,” if you had a Real Estate, you owned huge parcels for factories, shopping centers, warehouses, and office buildings.

    Large housing tract development, time shares, or condos surrounded the factories, and job centers, that attracted some high pressure sales techniques. It was actually in California, dealing with large estates, that the Residential Real Estate business began to take off.

    The post is about the value of residential housing units. The value of the housing units is way below market pricing. In Las Vagas that is equalizing more quickly to be in line with wages.

    Real “Estates” are still selling for what people can afford, which is a lot.

    In my opinion, the confusion comes from people comparing a housing unit in Ballard to the Estates on the bluff with big views, and big yard. There are nice houses on Sunset Hill that boost the Comparative Market Ananlysis. The inexperience of the people drawn to the residential real estate business is what confuses the pricing.

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  26. 26
    pfft says:

    By BillE @ 19:

    By pfft @ 3:
    I bet a lot of people thought that the housing market had not topped when the rate of increase just slowed. it slowed to a negative.

    that chart says you could have YOY gains by this summer…

    Remember that any improvement you see has come during massive government intervention in the housing market, which is scheduled to end before summer. And the only form of improvement there is that the declines lessened. All measures still show greater than 5% declines.
    Extremely low rates, giving $8k to new buyers and $6.5k to move-up buyers, continued subprime loans via FHA, and prices are STILL FALLING. Every one of those is scheduled to change this spring.

    the massive government intervention can only do so much. the market must stand on it’s own. in spite of intervention markets will still fall if that’s what they have to do. the stock market still fell after tarp and the stimulus. the housing market is still falling too on a YOY. massive government spending is like calling the democrats socialists. it’s used to win any argument as if the point is self-evident and in no other need of explanation.

    people don’t buy homes if they think they are going to lose their job.

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  27. 27
    AMS says:

    RE: Ira Sacharoff @ 22 – I question how long it will take for the median asking price to go back up to ~$350k from the ~$140k level today. Put differently, there are people who suggest that a profit can be made if you hold long enough. Yes, it reminds me of my friend who bought gold back near 1980 and sold at basically the same price some 30 years later. He was not going to sell at a loss. I call it 30 lost years, even if he sold at some negligible profit.

    Using the rule of 72, if homes went up in value by an average of 7.2% per year, it’d take 10 years for a double. Given the overall damage to the buyer pool, I am not sure there is sufficient demand to push prices higher at that rate. As always, high inflation would help push housing prices higher.

    The next thing I’m probably going to hear is that it won’t happen to Seattle, or to this property or that property.

    Not that long ago someone claimed that there was a “hidden premium” that buyers agree to pay. The person when on to describe how you “buy” your neighbors, and they agree to buy you. This claim was mainly on the 75th percentile homes and higher, which are also declining in value. How long are people willing to pay a premium?

    So what makes Seattle so special? Is Seattle special because of the vastness of high housing prices?

    In this analysis, I have compared Seattle housing prices to other markets, such as Vegas. The median asking price in Vegas was similar, within about 10%, a few years ago. Today the two are far apart. So many in Vegas said it wouldn’t happen to them.

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  28. 28
    The Tim says:

    By DefineTheBox @ 21:

    pfft reminds me of a guy from Ballard who used to proclaim that we’d be in positive territory by about two years ago. What happened to that guy anyway? Does anyone remember his name?

    He’d proclaim this and that, and we’d all try to respond with common sense, but in the end he just went away, wrong.

    Yeah I think we all miss meshugy.

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  29. 29

    RE: Herman @ 15

    Did You Buy In Last Spring?

    I’m guessing probably not. Compare the buying volume of 2006/2007 to last spring and you might as well compare a molehill to Mt Ranier….LOL

    My guess is there’s always someone that will buy the car full price off the lot and not dicker. The rest of us intelligent buyers get 20% off.

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