Case-Shiller: Seattle Home Prices Rewound to June 2004

Happy Case-Shiller day, everybody. Yes, it’s time once again for us to take a look at the latest data from the Case-Shiller Home Price Index. According to February data, Seattle home prices were:

Down 1.9% January to February.
Down 7.5% YOY.
Down 30.9% from the July 2007 peak

Last year prices fell 1.1% from January to February and year-over-year prices were down 5.6%.

February’s data marked yet another new post-peak low point for Seattle home prices, which have now fallen back to levels last seen in June 2004. Prices are down 9.7% since July (the first post-tax credit month), and down 11.2% from their late-2009 tax credit mini-peak. Wow the billions of dollars we spent to get people to buy homes in 2009 and 2010 instead of 2011 and 2012 sure was worth it.

Here’s an interactive graph of all twenty Case-Shiller-tracked cities, courtesy of Tableau Software (check and un-check the boxes on the right):

Only one city is still above where it was this time last year: Washington DC.

In February, sixteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops (or saw year-over-year increases) than Seattle (four more than January):

  • Washington, DC at +2.7%
  • Boston at -1.0%
  • Dallas at -1.2%
  • San Diego at -1.8%
  • Los Angeles at -2.1%
  • Denver at -2.6%
  • Cleveland at -2.9%
  • New York at -3.1%
  • San Francisco at -3.5%
  • Detroit at -3.7%
  • Las Vegas at -5.0%
  • Charlotte at -5.0%
  • Atlanta at -5.8%
  • Tampa at -6.0%
  • Miami at -6.2%
  • Portland at -7.0%

Falling faster than Seattle as of February: Chicago, Minneapolis, and Phoenix.

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of the raw Case-Shiller HPIs.

Here’s the interactive chart of the raw HPI for all twenty cities through November.

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.

Case-Shiller HPI: Decline From Peak

In the forty-three months since the price peak in Seattle prices have declined 30.9%, another new high, and rapidly approaching a full third off.

Here’s the “rewind” chart, to show you how much was gained, and then given back up over the last six-plus years:

Case-Shiller HPI: Seattle Rewind

The blue line on August 2005 represents the month that this site launched. As of February 2011, there have effectively been zero price gains since June 2004.

For posterity, here’s our offset graph—the same graph we post every month—with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. All four cities fell yet again in December. Year-over-year, Portland came in at -7.0%, Los Angeles at -2.1%, and San Diego at -1.8%.

I think this graph is still worth posting if only to display how the government’s massive intervention in the market screwed with the natural flow, causing all the markets to rise simultaneously, and once the artificial support was removed, to come crashing back down to reality simultaneously.

Case-Shiller HPI: West Coast

Note: This graph is not intended to be predictive. It is for entertainment purposes only.

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 04.26.2011)


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.

60 comments:

  1. 1
    Woodinville Renter says:

    It is all good. Not sure how this year’s Spring Bounce is going to pan out.

  2. 2

    Lots of Rattle Snakes in the Economic Recovery Chicken House

    1. Unemployment, as measured with Gallup polls and includes severely underemployed, like the Great depression data was measured and included [the BLS data is a rattle snake], is off the Richter scale.

    2. Stagflation is FAR worse than a depression….guess what, high unemployment with inflation is stagflation, welcome to the current economy.

    3. Desparation breeds denial and even apathy [I don’t want to think about it]….suppliers to Boeing suppliers getting hit by part shortages per CBS Marketwatch article in part:

    “…The incident highlights the difficulty aerospace manufacturers such as Embraer and its U.S. rival Boeing Co. /quotes/comstock/13*!ba/quotes/nls/ba BA +0.65% are experiencing in assessing the quake’s impact on the industry’s supply chain. Though Japanese companies that supply aircraft parts to manufacturers directly may have escaped damage, companies that supply the suppliers, which could number into the thousands, may have seen disruptions….”

    http://www.marketwatch.com/story/japan-quakes-disrupts-some-embraer-jet-deliveries-2011-04-25

    The Boeing impact news uses the word “may” today, it was revised from just “disrupted” yesterday….sounds CLEARLY like MSM lipstick on the “Boeing Impact Pig” from the Japanese disaster….

    4. Microsoft: its conundrum is summed up in this statement, “Stocks Risk Losing More Earnings Support”….

    http://www.marketwatch.com/video/asset/stocks-risk-losing-more-earnings-support-2011-04-25/ABBB7F89-117F-4E22-995B-26CC21BFE9AF#!ABBB7F89-117F-4E22-995B-26CC21BFE9AF

    We’ll see if the known rattle snakes kill all the recovery chickens, very soon at a theater near you too.

  3. 3
    Shoe Guy says:

    This is wonderful. Think of all of the extra money that home owners will have to pump into our consumption based economy when they’re no longer sacrificing 65% of their income on one single expense!

    Returning to a 3:1 house price to income ratio would do wonders for our ailing consumer economy!

  4. 4
    ray pepper says:

    2004 not bad at all……..Yet……………going home to Carson City area prices have rolled back to the 1980’s. Thats what happens with no jobs,no construction, and empty casinos.

    Each week I see more flipper properties hitting the market and not selling. The investors are starting to realize they over spent in 2010-11 and now have a serious dilemma. I have no doubt many of these will be coming back as well. Eastside funding get ready!!

    “Spring Bounce”——only in attendance at the Trustee Sales.

  5. 5
    hoary says:

    You called it Tim! /ht

  6. 6
    Scotsman says:

    ” Wow the billions of dollars we spent to get people to buy homes in 2009 and 2010 instead of 2011 and 2012 sure was worth it.”

    Tim, you need to think of those billions as an investment in the future. Without tax incentives encouraging buyers to jump off the fence there wouldn’t be a fresh crop of home owners to bail out as a vote buying effort for the 2012 elections. Those billions were only the seeds of a future stimulus, yet to be announced. Try thinking strategically, with a heavy emphasis on self preservation and it will all become clear. /sarc

  7. 7

    RE: Shoe Guy @ 3

    Try 1:1 When the Big Banks Finally Fail

    When ma and pa little banks take over, hades, it could be the pawn shop next door; the prevailing lending limit in the 50s-60s was 1:1….unless you had extra wealth as collateral to the loan.

  8. 8

    RE: Scotsman @ 6

    Yes Scotsman

    It would have been much better government fiscal reponsibility to have cut the stimuluses in half and burned the pile of money up instead….at least we’d of only lost half.

  9. 9
    patient says:

    Ouch, almost 2% down in one month, a bit inconvinient reality in the recent blitz of “close to the bottom”, affordability, it could be your time to buy posts?

  10. 10
    One Eyed Man says:

    ” Wow the billions of dollars we spent to get people to buy homes in 2009 and 2010 instead of 2011 and 2012 sure was worth it.”

    If one compares the decline in the composite 20 in the first graph for the period of 2007 thru 2008 to the decline in the composite 20 for the 2009 thru 2010 period, one could make more than just a BS case, that the credit had substantial economic value in moderating the decline in the real estate market and the decline in the economy in general. If the 2008 pace of decline had continued uninterrupted, the market might have substantially over corrected, resulting in further collapse of the financial system and the economy in general.

    As I’ve said before, I go on a 3 day sailing trip each summer. One of the guys is a conservative republican who runs the operations west of the Mississippi for a relatively small national building supply company listed on the NYSE. Each of the last 2 yrs we’ve all made 4 or 5 economic predictions and compared them a year later. In 2009 he predicted that the credit would be a failure. Last summer he said he would call the credit a success because without it his company would have burned thru its cash reserves and probably gone bankrupt. The leveling off of price declines across many markets in 2009 and 2010 bought them the time needed to close down the losing operations and turn cash flow positive. Hundreds of jobs were lost in his company, but without the credit he thinks it would have been a couple thousand, including his.

    I wasn’t in favor of the credit, and I’m not sure that it was a success. But I’m not sure that from a macro economic point of view it was the obvious failure that one might think.

  11. 11

    RE: patient @ 9
    Even If You Had a Big Bag of Cash or Other wealth Collateral to Buy Seattle Area Real Estate

    Why waste good cash now [unless you simply don’t care and/or you’re extremely cash rich], when the price is spiralling down?

  12. 12

    RE: One Eyed Man @ 10

    I’ve Thought the Same Thing Too

    Maybe it would have been worse without the GEs’ paying no taxes and the banksters not getting bonuses. We’ll never know, but one thing for sure…..the trillions in welfare to the rich [much of it went to foreign banks BTW] has not stopped the unemployment worldwide, in fact it got worse. has not stopped inflation, in fact its gotten worse.

    One could say it could have been worse…..but even losing big in Vegas and packing to go home is no reason to allege it could have been much worse if I wasn’t packing to go home.

  13. 13
    patient says:

    Failure or success, is it defendable of the government to use tax payer money as bait to trick tax payers into really poor fincancial decisions in order to save the financial institutions that created all this mess?

  14. 14
    The Tim says:

    By patient @ 9:

    Ouch, almost 2% down in one month, a bit inconvinient reality in the recent blitz of “close to the bottom”, affordability, it could be your time to buy posts?

    You seem to be mis-remembering what I wrote. On affordability, I said:

    Does this mean that home prices are at bottom? Probably not quite, since most busts tend to over-correct, and we’ve still got quite a few negative economic factors hanging over our heads in combination with a growing sentiment that homebuying is only for suckers.

    On local incomes, I said:

    …I called for the “bottom” in December 2010 at 36% off the peak. … As of January, prices as measured by Seattle’s Case-Shiller home price index are 30% off peak. Another 6% drop from the peak translates to about another $30,000 off local home prices. Doesn’t seem too unreasonable to me by this coming December.

    On “your time to buy” I said:

    I contend that even if every possible economic and market measure were positive, it still would not be “a great time to buy”…If home prices are at rock-bottom, interest rates are at one percent, the economy is booming, is it a great time to buy? [Not necessarily.]

    and

    There’s always some risk of a price decline…

    I’m wondering, how does any of that conflict with another 2% drop in Seattle-area home prices between January and February?

  15. 15
    Matthew says:

    June 2004… GREEN SHOOTS! Can we please hear from Magnolia44, Meshugy, PFFT, or Mukoh about how everything is going to be just peachy?!

  16. 16
    patient says:

    RE: The Tim @ 14
    No offense Tim it might just be me that has detected a change to a less bearish stance in your recent posts and this last case Shiller reading is not really supporting such a notion. In one post you came across as pretty defensive about the view that we are close to a bottom. It might not be what you meant but that’s how it came across to me.

  17. 17
    The Tim says:

    RE: patient @ 16 – Why shouldn’t I be less bearish when the data that made me bearish 2005-2010 is less bearish? It’s called not being a perma-bear.

    Don’t get me wrong, I’m no housing bull. I’m just saying that home prices are getting back in line with local economic fundamentals. That’s what the data is telling me, so that’s what I’m telling my readers.

    Think of it another way… In 2006 when I said that home prices were too high and poised to fall, did the following months of Case-Shiller gains somehow mean I was wrong?

  18. 18

    RE: The Tim @ 14

    You’ve Been Spot On Most of the Time

    And you always document your accurate estimates and even educated guesses as such too.

  19. 19

    RE: Matthew @ 15

    They Come Back After a Short-term Stimulus

    Followed by the inevitable downturn after the money’s burned up. Then they disappear. They may be back if we inject more deficit QEs, but that method is probably extinct like the dinosaurs with the Tea Party auditing things now…..so don’t expect them.

  20. 20
    Scotsman says:

    RE: patient @ 16

    I sense it too. He’s probably under pressure from the wife and fellow industry workers to buy now or be priced out forever. He’s not getting any younger, and they aren’t making any more land. We all know you can’t raise kids in a rental- think of the damage to their self esteem!

    Go ahead, Tim- buy a house. You have a stable job, in a stable industry (well, maybe), and you can just make double payments once in a while to maintain positive equity. Think of the credibility you’ll earn at Redfin. And some of those realtors are pretty cute. . .

    “Come on Tim, I know you’ve been saving that big wad for this moment- bring it over here to the table and let’s get this deal done!

    http://www.solarnavigator.net/films_movies_actors/actors_films_images/michelle_pfeiffer_red_hair.jpg

    (that’s my OneEye impersonation)

    I’m sure buying makes sense for some people. But I remain convinced buying now will prove to be more expensive and limiting than most plan for or expect. But hey, life’s never perfect.

  21. 21
    patient says:

    RE: The Tim @ 17
    Well for starters there is no such thing as being too affordable in the same sense as to being too expensive I.e analysis that points to unsustainable prices are not nearly as useful to predict a bottom and it seems like the affordability analysis is the main foundation for your shift. Sorry but I don’t see the case for being less bearish at this time.

  22. 22
    LA Relo says:

    Some of the fundamentals may indicate we are nearing a bottom. Not to speak for the Tim, but I think what he is getting at, is it’s not impossible that we look back at today, 12 months from now and see the bottom.

    Then again, I don’t think he is ruling out that the bottom is still a ways off either. And in fact, there plenty of factors that put the bottom a ways off still.

    Calculated Risk just commented on a report that “26 percent of renters spend over half their income on housing.” Add to that the fact that incomes have not gone up in a decade prices stand little chance of turning around any time soon no matter how inline average incomes are with prices. From what I hear, it’s harder to buy a home today than it was in the last decade, and the only activity driving today’s market is distressed inventory, and there’s no shortage of that.

    If history is any indication, prices will overshoot the fundamentals anyway.

  23. 23
    Scotsman says:

    RE: The Tim @ 17

    ” Why shouldn’t I be less bearish when the data that made me bearish 2005-2010 is less bearish?”

    Because the totality of the data is much more bearish now than it was in 2005-2010. None of the data you emphasize here- price/income, CS returning to trend, inventory/sales numbers, etc. even begins to capture the macro picture. And all of your data is historical when what is required is an understanding of how future pricing model inputs, both economic and political, will be evolving and interacting. That stuff doesn’t fit on a chart. You just have to be aware of the change that’s happening and think it through, like a chess game with thousands of permutations, each assigned a probability, eventually reduced to a smaller set of likely outcomes. The result is that it is indeed worse now, with fewer options, and less time to try and turn things around.

  24. 24
    Blake says:

    RE: softwarengineer @ 19
    Re: “with the Tea Party auditing things now…”
    I think you ascribe more power to the Tea Party than they actually have. The media is still covering their dwindling and pitiful rallies and the elected “members” are being assimiliated. It’s pretty much business as usual…

  25. 25
    Scotsman says:

    ““There is very little, if any, good news about housing,” David Blitzer, chairman of the Case-Shiller index committee at S&P, said in a statement. “The 20-city composite is within a hair’s breadth of a double-dip.”

  26. 26
    Macro Investor says:

    A few weeks back we had a thread where predictions of another 20-30% down were ridiculed as extreme. Today’s data point annualizes to 25%. Kind of puts those extreme “perma bear” predictions in a different light, doesn’t it?

  27. 27

    RE: Blake @ 24

    You’re Right About the Budget Stalemate Being Solved Against Tea Party Lines

    I was just inferring, IMO, adding more deficit spending to the 2012 budget will be like pulling teeth, having just dodged a government shutdown over it, probably caused by the Tea party, BTW.

    And I’m assuming the Chinese and Japanese don’t all cash in their bonds right after QE2 ends in June. Those additional intangibles aren’t on Tim’s charts either.

  28. 28

    RE: Scotsman @ 25

    Let’s Split It Down the Center With Tim and Scotsman

    We’ve still got at least 10-20% drop to go….sounds like kissing your conventional loan down payment good-bye. Not a small loss…..especially if there’s more loss down the pike.

  29. 29
    ray pepper says:

    RE: Scotsman @ 23

    I totally agree with Scotsman and furthermore so do the people with the BIG DOUGH. The real money knows we are still years away from a “bottom.” The bottom that will never come. One that will be flat and trend line down for years.

    Just too many millions of people walking and so many more millions that will short sale. Its going to get ugly but I still say there are GEMS to be scooped up. When the cost to buy is far less then the cost to rent you have a GEM.

    When anyone says things are “perking up” or “looking better then it used to” they are grossly misguided. Gas over 4.00 per gallon and over 400 homes per week at Trustee Sales!! Good Lord!

    Banks and sellers not responding to your offers? No inventory? WAIT IT OUT! There will be in the coming years. They need to sell far more then you need to buy. Real Estate companies, Title, Escrow, Mortgage all need Buyers. The sellers will be everywhere but its the Buyers that will hold all the leverage in the coming years.

    I cannot understand how anyone can be bullish on housing with all the info that is presented. They are all coming back and this deleveraging will be UGLY!

  30. 30
    SeattleBubble101 says:

    By Macro Investor @ 26:

    A few weeks back we had a thread where predictions of another 20-30% down were ridiculed as extreme. Today’s data point annualizes to 25%. Kind of puts those extreme “perma bear” predictions in a different light, doesn’t it?

    SeattleBubble 101 – real estate is too seasonal for annualized monthly changes to mean anything.

  31. 31
    fubarrio says:

    RE: The Tim @ 17

    ‘when you’re a hammer, every problem you see is a nail’

    iow, you’re incredibly gifted at sifting and analyzing the *data*. but data alone does NOT drive a bubble or the unwinding of a bubble — it’s human emotions and herd instincts.

    if it was just fundamentals and data points, the bubble would never have happened.

    trends stay intact for much longer than they should because the trend ends up reinforcing itself until it (eventually) exhausts itself.

    to that end, ‘top calling’ or ‘bottom calling’ is best left to ‘for fun’ and not a ‘for profit’ exercise.

    you obviously have a powerful intellect, so if you don’t want to delve into things so ‘soft’ as human emotions, look at the last few bubbles and blow-offs that occurred in various markets.

    check out the writings of don coxe who analyses markets and triple waterfall collapses.

    we haven’t even gotten started. a bottom anywhere near here would either be an extraordinary outlier in the history of bubbles and collapses/corrections or a ‘false bottom’ that would suck the next round of future foreclosures into the market.

    all, imo obviously.

    p.s. i don’t know your personal circumstances, but during the bubble it was hardest for those who profited the most from the sustained price rises to see the imminent collapse — how many realtors (for instance) were in denial?

    you should think about whether a strong/renewed real estate market would benefit you or your company in some way and you are subconsciously hoping for stabilization and/or a recovery.

    my bias is that i want to buy in a nice neighborhood for 2-3x my salary…that’s a ways off, so that’s one of the reasons i see continued collapse. :-)

    fubarrio

  32. 32
    Macro Investor says:

    RE: fubarrio @ 30

    “if it was just fundamentals and data points, the bubble would never have happened.”

    Brilliant. Listen to “the barrio”.

  33. 33
    Macro Investor says:

    RE: ray pepper @ 29

    “They are all coming back and this deleveraging will be UGLY!”

    Ray, I think about this A LOT. By the time they all “come back”, I wonder if the housing stock will be so worn out from deferred maintenance that neighborhoods or even cities will be severely damaged.

  34. 34
    deejayoh says:

    By Macro Investor @ 26:

    A few weeks back we had a thread where predictions of another 20-30% down were ridiculed as extreme. Today’s data point annualizes to 25%. Kind of puts those extreme “perma bear” predictions in a different light, doesn’t it?

    Well, I’ll be the first to ridicule taking a month over month number and annualizing it.

  35. 35
    LocalYokel says:

    By Macro Investor @ 33:

    RE: ray pepper @ 29

    “They are all coming back and this deleveraging will be UGLY!”

    Ray, I think about this A LOT. By the time they all “come back”, I wonder if the housing stock will be so worn out from deferred maintenance that neighborhoods or even cities will be severely damaged.

    You mean pretty much Ballard/Crown Hill. :)

  36. 36
    David Losh says:

    RE: deejayoh @ 34

    Let’s start with the decline of tax assessments: http://www.bloomberg.com/news/2011-03-30/real-estate-crash-catches-up-to-cities-as-property-taxes-slide.html

    The article shows that a decline in taxes causes municipalities to cut workers, and services.

    Then there is this press release about investors “snapping up” foreclosures: http://www.google.com/hostednews/ap/article/ALeqM5j_Bzq7vYvMWBLzkfLRUfJPdbXmxQ?docId=6803ae3b2c114a36bc1ec094b5ab5cb0

    Last is the Houses at 40 year lows? Not even close: http://www.ritholtz.com/blog/wp-content/uploads/2011/04/Residential-Real-Estate-Relative-to-Median-Income-Rent-.png

    What it all means is that prices are declining, are continueing to decline, and most probably will continue to decline.

    After the foreclosures drop the price of housing, after investors who bought now see prices continue to decline, and after municipalities start shutting down some of the cool amenities people bought close to, like schools, then you have the baby boomers who wish they would have sold sooner.

    It’s a cycle that is perfect.

  37. 37
    Jonness says:

    By patient @ 9:

    Ouch, almost 2% down in one month, a bit inconvinient reality in the recent blitz of “close to the bottom”, affordability, it could be your time to buy posts?

    I believe it will take years for this to play out as opposed to months. Anyone looking for a bottom right now is overly caught up in short-term noise. That being said, I believe we will see minor appreciation in April, or May. However it might not show up in the CS data because of month averaging. July onward will probably get ugly as Bernanke stops the printing presses. :)

  38. 38
    Jonness says:

    By One Eyed Man @ 10:

    The leveling off of price declines across many markets in 2009 and 2010 bought them the time needed to close down the losing operations and turn cash flow positive. Hundreds of jobs were lost in his company, but without the credit he thinks it would have been a couple thousand, including his.

    Meanwhile, the rest of us sorry suckers are stuck paying back the loans from China and Bernanke.

  39. 39
    Jonness says:

    By The Tim @ 17:

    Why shouldn’t I be less bearish when the data that made me bearish 2005-2010 is less bearish? It’s called not being a perma-bear.

    With all due respect, you were years early on your call for a correction. Why should we believe you are not also years early on your call for a bottom?

  40. 40
    Kary L. Krismer says:

    RE: Jonness @ 38 – Jonness, I answered your question in the Twitter thread.

  41. 41
    The Tim says:

    By Jonness @ 39:

    With all due respect, you were years early on your call for a correction. Why should we believe you are not also years early on your call for a bottom?

    Please find the reference where I said pre-peak that we were at the peak. Please also find the reference where I am saying today that prices are at the bottom.

  42. 42
    Hugh Dominic says:

    The Tim has softened his bearish stance based on the same data and observations that made him right for years. I think he is correct. The fundamentals are better than they were.

    He has not called a bottom, only softened his position.

  43. 43
    Jonness says:

    By LA Relo @ 22:

    Add to that the fact that incomes have not gone up in a decade prices stand little chance of turning around any time soon no matter how inline average incomes are with prices..

    It’s important to note, average incomes are back in line with fundamentals. However, prices are still 20% higher than historical relationship to people’s incomes who work for a living. So the data Tim’s looking at tells me it’s a great time to buy a house if you are a multimillionaire, but if you are stuck working for a living, you’d probably be better off waiting for the correction to fully play itself out.

    It makes no sense that King County prices would be at the same level compared to median income as other WA counties that lack google and microsoft. Yet, supposedly King County has overcorrected and other WA counties still have 20% to go. The Seattle overcorrection hypothesis is based on “locality,” and will not pan out because it lacks the proper weighting of macroeconomic factors and avoids the fact that people who work for a living buy most of the houses. Yes,many people can afford higher priced houses than median, but let’s face it, Tim’s analysis fails to consider the need for first-time buyers in order that the move-up buyers can afford the more expensive houses.

    Right about now, we should all take a second look at all cities on the Case Shiller and note the effect the tax credit had on house prices. That’s called macroecomic influence that trumps locality. Still to come is Bernanke stopping the printing presses, weakening GDP, and bunch of other fun stuff. When this occurs, People who work for a living won’t be able to afford houses, and there aren’t enough multimillionaires with super-high average incomes in town to buy up all the vacant slums.

    I absolutely respect Tim’s intelligence, data analysis capabilities, and enthusiasm for housing data. But I’m at a complete loss to explain his sudden surge in bullish sentiment, as it doesn’t appear to have any correlation with the available data. With all due respect to him, either I’m wrong, or he’s wrong, and only time will tell.

  44. 44
    ESS says:

    As both a home owner and a real estate investor and owner of two rental houses at this time, I have seen and experienced all of this before. The sale of real estate may remain in the doldrums for the next few years, but I expect it to recover, as it has all the other times. Yes, the market for house and condo sales may be slow, but that will result in a tightening of the rental market. Kids aren’t going to live at home with mom and dad for ever, sharing apartments and houses gets old, and people are still migrating into this area. Tightening credit requirements will also increases the number of people that don’t have any choice but to rent. A lack of new housing construction, higher gas prices, the desire of many to live in the Seattle metropolitan area, and the Urban Growth Management Act all result in a tightening of the rental market in the Seattle area. For many landlords that don’t need to sell their houses — it is going to be a good time. And who knows — even the apartment rental market may recover in due course.

  45. 45
    David Losh says:

    RE: ESS @ 44

    Whoa, you hit a hot button for me because the rental market is dismal. It’s dismal by design of having people buy housing, rather than rent. It’s a cycle that has played out over the past decade since 1998. Fewer apartments were built, cluster housing was converted to town housing, multi families were converted to higher density.

    There is only a lag of conversion right now. The shadow inventory will convert to either rental, or or lower price point housing unit sales. banks are dragging out the foreclosure process to keep pricing of both sales, and rentals at a premium.

    Look at today’s housing starts, and the City Councils rezone of South of Pioneer Square. The development on Capitol Hill was just getting started with the lifting of the CAP Initiative when the economic collapse put those projects on hold.

    We have massive amounts of dirt to develop, and all of the zoning, and building technique to throw it all up in a hurry.

    My advice is to sell those rentals and buy some places for cash with a more stable rental market. Best of luck, but this rental market is highly skewed for the benefit of a very few.

  46. 46
    LocalYokel says:

    RE: David Losh @ 45RE: ESS @ 44 -Gentrification at its finest. Kind of sucks when the DSA and the Chamber own Seattle, while the neighborhoods go to crap.

  47. 47
    IHMHL says:

    RE: Jonness @ 39 – you are laughable. Please find someone – anyone who called the top “exactly” at the top.

  48. 48

    RE: LocalYokel @ 46

    Yeah

    I heard the U of W [State of Wash] owns about half of the Seattle prime real estate.

    When did govenment become the ruler of the serfs?

  49. 49
    SeattleBubble101 says:

    The problem is many perma-bears latched on to this site, thinking Tim was a perma-bear too. Now that he’s softened his position, the perma-bears are upset that their leader is leaving them.

    Here’s the thing tho – Tim went out on a limb and created this site, even when everyone said he was wrong. None of the posters here put their beliefs on the line like that. Read about him on his site, he’s clearly more ethical than your average guy. Seriously, SeattleBubble turns “D-A-M-N” into “golly” and h-e-double hockey sticks into “Hades” (In case you thought softwareengineer really likes using “Hades”). All this sellout talk is pretty insulting, IMO.

  50. 50
    The Tim says:

    RE: SeattleBubble101 @ 49 – Thanks for the kind words. Amusingly, softwareengineer actually is typing “Hades.” “Hell” is not on the filter list.

  51. 51
    NewHomeOwnerInFremont says:

    It’s starting to look like things are turning. Renting is getting expensive:

    http://money.cnn.com/2011/04/26/news/economy/affordable_rentals/index.htm

    It is indeed looking like the bottom may not be that far away.

    @SeattleBubble101: Spot on.

  52. 52
    One Eyed Man says:

    RE: The Tim @ 50

    Now that is funny! And I agree with Seattlebubble101.

  53. 53
    Matthew says:

    RE: IHMHL @ 47 -I called the top and was only off by a couple of months. I believe the top was July 2007 and I called April 2007. Pretty close.

  54. 54
    Matthew says:

    Just because you believe the market has a way to go before it touches the bottom does not make you a perma bear. There are a myriad of economic headwinds that this country is facing in the near future that will have a major impact on the housing recovery. I for one, don’t believe we will hit bottom until we are in full recovery mode. Do you think Robert Shiller is a “perma bear”? He is calling for as much as a 20% decrease in housing NATIONALLY. Look at how much money we have already thrown at the problem and have gained absolutely zero traction. The Fed is still manipulating rates and we still have no bottom in sight! We aren’t even close. It has nothing to do with a bearish perspective, it’s called “keeping it real”.

  55. 55
    patient says:

    RE: SeattleBubble101 @ 49
    The Tim is in no way our leader. He is providing an excellent data source and a nice forum for discussions and Seattlebubble was early a beacon of light in the darkness of all the repulsive cheer leader sites that makes up most of the real estate bloggin sphere. It remains an excellent data source but the light has become slightly dimmer :)

  56. 56
    IHML says:

    RE: Matthew @ 53 – Good for you. May be it was your analysis or pure luck or just one out of 100s of darts that hit the bullseye. As they say if you are in the business of making predictions “make a lot of them”! Real estate cycles are so far and few in between that its easy to get one right and miss the next one very badly. The important question is not if you predicted it right, but did you make any money out of it? Predictions without rewards are just useless.One has to appreciate Tim who had the guts to back his analysis by NOT jumping in to buy when the bubble was blowing. Even though he was off by a year or so, he did end up saving a lot of money. A dollar saved is actually better than a dollar earned (taxes and all that crap).

  57. 57
    IHML says:

    RE: SeattleBubble101 @ 49 – I COMPLETELY HONESTLY second that opinion. Tim, you are doing an awesome job at just basing your analysis on facts and not your biases and that’s what I love about seattlebubble.com. Keep up the great work you are already doing!

  58. 58
    Scotsman says:

    RE: IHMHL @ 47

    I called the top in August, 2007 the moment the mortgage market began to collapse. By September it was pretty clear there was only one way to go- down. And it wasn’t based on fundamentals, but observation, logic, and a willingness to think things through. Pretty much what I stated in post #23 above.

    I’ll let you know when we hit bottom, as it too will be pretty obvious. But don’t hold your breath- we’re still a long ways off.

    It’s a really crappy time to buy a house. Which is too bad, because I’m dying to buy not just one, but several.

  59. 60
    Matthew says:

    RE: IHML @ 56

    Made a ton of money shorting the financials that year. More importantly, I didn’t lose any money by buying a home when everyone around me told me to.

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