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: < $238,273 (down 1.4%)
- Mid Tier: $238,273 – $385,378
- Hi Tier: > $385,378 (down 1.1%)
First up is the straight graph of the index from January 2000 through October 2011.
Here’s a zoom-in, showing just the last year:
All three tiers continued to fall in October, with the middle tier taking the biggest hit again. The low tier fell 0.8% MOM, the middle tier dropped 1.3%, and the high tier lost 0.7%.
Here’s a chart of the year-over-year change in the index from January 2003 through October 2011.
Mostly bouncing around where we’ve been the last four or five months, save for some recovery in the derivative of the low tier. Here’s where the tiers sit YOY as of October – Low: -12.2%, Med: -8.9%, Hi: -4.2%.
Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.
Current standing is 40.0% off peak for the low tier, 33.2% off peak for the middle tier, and 26.9% off peak for the high tier. The low tier is still the only one at a post-peak low point.
(Home Price Indices, Standard & Poor’s, 12.27.2011)
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Where’s All the Bloggers
With their incorrect bottom calling the last couple years?
They handed their keys to the bank with underwater loans and are now renting?
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FYI, for those like me who are red-green colorblind, the difference in color between the “High Tier” and “Seattle Aggregate” lines are nearly identical. Thanks for the icons for distinguishing as well. =)
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“The low tier is still the only one at a post-peak low point”
Give it a few months. The others will catch up. :-)
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RE: Lake Hills Renter @ 2 – Cool, that’s the main reason I include differing icons on the lines. Glad to hear that it helps.
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By No Name Guy @ 3:
Maybe, maybe not. The reason for that may very well be that the low tier is made up largely of REO listings which sell for far less. Thus it very well may be a mix issue rather than a market issue.
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Best insight I got from SB in 2011 is “why try to catch a falling knife!”
Real estate is kind of like double dutch, when do I jump in? Credible data like C-S tells it all, and all Seattle areas are continuing to going down, including pink pony neighborhoods! I stay on the fence…..
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THUMBS UP for the thumbs up/down buttons!
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RE: johnnybigspenda @ 7 –
No kiddin’, I just noticed that.
Cool!
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RE: Kary L. Krismer @ 5 –
I would guess spot lot builders are driving the engine on lower priced dirt.
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RE: David Losh @ 9 – That’s happening too, but not in as large of volume, even at the under $400k price range.
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RE: Kary L. Krismer @ 5 – it more than likely has to do with the mix, and which properties are most likely to be REO at this point.
What we saw/are seeing in California, however, is that the banks are finally moving on some of the more expensive properties and bringing the higher tiers down as well — this also tends to drive reported medians up.
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RE: fubarrio @ 11 – That would be an interesting change to see happen. I don’t usually track this, but only about 14% of SFR REOs were over the median for November, and only a handful were over $1M. With 86% of the REOs being below the median, and their median being well below the overall median, they clearly would drag it down.
Numbers from NWMLS sources but not compiled by or guaranteed by the NWMLS.
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thumbs up and down ROCK!!
Time to start nailing people!!
Wonder if Tim is able to tell who dogs him with a thumbs down? I’m sure he can.. Gotta try since I’m still waiting for a bluey or whitey..
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By Brad @ 6:
Are you sure? What about NE Seattle, like Laurelhurst or MapleLeaf?
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From this, we can conclude that the median price of homes sold as measured by CS is ($238,273 + $385,378) / 2 = $311,825. When this price gets down to 3 x $65,000 = $195,000 we should be close to the bottom, unless wages have fallen further. This seems reasonable as CS has provides a more accurate measure of home values.
So, prices could still drop another 35%!
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By softwarengineer @ 1:
A well deserved “Pinky!”
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RE: Kary L. Krismer @ 5 –
Perhaps its mix related. In any event, without a concrete reason for prices to stabilize (solid employment gains, GDP gains, rents skyrocketing, etc), I’m putting my money (in the form of holding off on buying a rental property) on continued price drops.
What I see in the charts The Tim posted is the strong seasonality pattern in all three tiers. Falls off a cliff in the fall / winter and then either stabilizes or increases slightly (Month over month, but still down year over year) into the prime selling season, only to bounce lower yet again the following fall. It’s like watching a ball bounce or a slinky step down a set of stairs.
Eyeballing the charts, I’d guestimate that the middle tier is only a month or two away from a new post peak low. The high tier….it’ll take a bit longer.
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RE: Kary L. Krismer @ 5 –
KaryK, that is what we probably are also seeing in Phoenix.
There the number of both listings and sales of REOs have dropped, a lot. Taking about 20% of the lowest priced homes out of the CS statistics. That, in turn moves ALL of the other “average” levels UP.
Similarly, short sales have increase almost by the same number as “foreclosures” have dropped. With both the seller and their banks taking a smaller “haircut”, SS prices are both above “foreclosures”, but also below “regular” MLS sales. That also drives the “averages” of all price levels up.
And, while Seattle – oh, sorry, once again we are ignoring Bellevue (and Tacoma, too) – may have seen some of the WAMU bubble years very bad ARMs and subprimes, you most certainly did not see them on the scale of Cal, Nev, Fla or AZ.
Kary N Tim – there is an interactive page on the AZRepulblic’s “real estate” page that shows U.S. where the foreclosures started and how they changed as the collapse progressed. Absolutely fascinating. Began with the very bad ARMs & subprimes, which are almost all gone now; and then moved inward toward central Phoenix, and up in home prices.
We think that you will see that the largest price declines have been in the “bedroom communities” surrounding Seattle, and not in the city of Seattle itself. Not bcuz Seattle is better than them – it is of course – but bcuz that is where the bubble building and mortgages took place.
But, what is true in Cal, also appears to be true in AZ – that mid and upper priced homes have not been “foreclosed” as much – yet. They may never be, but what we think might be true is that those home owners are financially better able to hold on to their homes, and are not financially willing to take the huge losses that they have to take in order to sell them – also yet.
Part of the evidence of that is the extremely long time upper priced homes stay listed on the AZ-MLS, and the extremely low number of sales of those home.
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By johnnybigspenda @ 7:
I’d personally prefer less differentiation in the post background. Trying to quickly read through a long list of posts in grey, pink, and bright yellow is more mentally taxing than it should be. The bright colors in particular kind of assault the eyeballs. I’d prefer uniform coloration, but if there must be differentiation then something subtle like the blue/green previously used for emphasis would be much less jarring.
Thanks Tim.
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RE: MichaelB @ 15 – I think you’re unlikely to see Seattle prices hit 3x incomes absent wider economic distress which would make such statistics meaningless.
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RE: Drone @ 20 – I would not count “wider economic distress” out of the picture yet. Wages, and house prices, tend to follow the larger economy. And I am really not seeing anything that will change the overall picture in the near future. What few positive signs in the economy we are currently seeing tend to mitigate the downward trajectory, not lead to strong recovery. And until we get a strong recovery, we will not see much in the way of housing appreciation.
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RE: Drone @ 20 –
Hi Drone,
What is the basis for your belief?
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RE: WestSeattleDave @ 21 –
I believe the “wide economic distress” is a bit of a “chicken and egg” thing as housing is the major drag on the economy. When private debt is high banks don’t lend, people don’t spend, and the recession won’t end.
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RE: MichaelB @ 22 –
Michael; this has been brought up in the last few years (myself included). But many people here, including Tim, have pointed out that in the last 40 years or so, the area has never seen the widely publicized 3 x medium household income. If I recall correctly 4x has been the lowest.
Of course, there is always a first time; and quite a few of us on this site are hoping it happens.
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RE: HappyRenter @ 14 –
I have checked out plenty of houses in North Seattle, currently renting in MapleLeaf on 90th street. I moved to Seattle in April and have been assessing the “local” North Seattle market since February 2011. Target areas are MapleLeaf/Green Lake/Ravenna/Phinney/Wallingford. North Seattle is a much more desirable and stabilized area, but prices continue to decline, not as much as Case-Shiller Seattle aggregate, but declining nonetheless. Seattle declines are delayed, as The Tim highlights as compared to rest of the nation, a slow ride down.
In the past few months I have noticed an increase of “decent” properties coming on to the market in the sub $400k range, about $30k less than earlier in the year. I’m on the fence for another year, as rent is cheaper than a $30k/year decline, and I don’t get saddled with negative equity from transaction costs.
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RE: Cheap South @ 24
Good point. However, 40 years is not as long as some people think!
We’ll see…
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