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: < $238,188 (up 2.4%)
- Mid Tier: $238,188 – $377,643
- Hi Tier: > $377,643 (up 2.3%)
First up is the straight graph of the index from January 2000 through April 2012.
Here’s a zoom-in, showing just the last year:
The low tier finally stopped falling in April, and in fact turned in the biggest month to month gain. The low tier rose 2.0% MOM, the middle tier rose 1.3%, and the high tier gained 1.5%.
Here’s a chart of the year-over-year change in the index from January 2003 through April 2012.
Slight dip in the high tier (but still in the black), flat for the middle tier, and a big improvement for the low tier. Here’s where the tiers sit YOY as of April – Low: -8.7%, Med: -1.6%, Hi: +0.3%.
Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.
Current standing is 43.1% off peak for the low tier, 33.7% off peak for the middle tier, and 26.8% off peak for the high tier, all three tiers up off their lows.
(Home Price Indices, Standard & Poor’s, 06.26.2012)
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We Heard This Same Good News a Year Ago
“…Only two of the 20 cities in the index — Seattle and Washington, D.C. — experienced even a slight uptick from the previous month…”
http://consumerist.com/2011/05/home-prices-continue-to-fall-everywhere-except-seattle-dc.html
And the year before that too, etc, etc…
“…Well, check out the stats: The median price for a residence (factoring in both houses and condos) in the city rose 3.35 percent to $371,500 from $359,475 this time last year; the median condo price is now $290,500, up 6 percent over last February and the median single-family home is $399,000, up 1.4 percent from this time last year….”
http://publicola.com/2010/03/04/seattle-home-prices-rising-371500-was-februarys-median-price/
What does it mean? I’ll leave that to you bloggers, I’m in no mood today to stir up any witches brews on monthly trend data.One thing is for certain, YOY they went down.
“…While prices are still down 1 percent from a year ago, the newest figures indicate movement toward recovery in the housing market….”
http://www.bizjournals.com/seattle/news/2012/06/26/seattle-home-prices-up-for-second.html
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I have been wondering about the inventory in North or Northeast Seattle. I wished that there was a better choice.
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RE: HappyRenter @ 2 – How would anyone possibly know that?
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RE: Kary L. Krismer @ 3 –
At least you agree that currently the choice is not really fabulous. Has it usually been better prior to the bubble?
Thanks.
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Can I presume you are not using the seasonally adjusted C-S figures through April? In the SA data Seattle’s low tier hasn’t budged since bottoming in January (116.66,116.65, 116.52
116.58), with the middle tier showing the strongest bounce. If you do not use the SA figures, why not?
I also don’t see the year over year trend you’re showing, in fact in the seasonally adjusted data, I show a decline of over 8 percent. What am I missing?
I find the info here very compelling but have assumed that S&P wouldn’t do adjustments unless it was worth it.
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RE: HappyRenter @ 4 – I became an agent about a year before the peak, so I don’t have a lot of information on what selection was like before the peak. My general impression though is that more listings were coming on the market, so at a minimum there was more to look at once you’d looked at all the existing inventory in the area your client was interested.
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RE: HappyRenter @ 4 – Here’s the reason the choices aren’t ‘fabulous’.
Look at the top tier, specifically decline from peak, the top tier took a 22% hit in the 1st 18 months. After that It’s only down 5% in the 3 years that follow!…. That’s a statistically flat market for the upper tier. This bubble you guys are talking about doesn’t affect the people who own 90% of the wealth in this country or the upper middle class (the people who probably have the house you want). The inventory (no matter how many units it is) is/will continue to be low tier, low total capital and is/will be absorbed by the upper tier folks who will pick and choose the ones they want and use the houses for rentals (instant positive cash flow) or give them to their children. This cesspool of icky little houses flooding the market is just a conversion of ownership away from low tier people. Once the conversion is complete and the properties are in responsible hands, inventory will evaporate. It already is starting to. The people who are holding out for their dream home to come down to 3X their income need to get another plan. it probably isn’t going to happen. BTW if you’re watching the median values on Redfin and you’re thinking something good’s coming your way, the only reason they’ve fallen is because of the cesspool itself, that’s how median numbers work, it doesn’t mean good houses are coming into your price range.
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RE: corndogs @ 6 –
It sounds like there is actually a shortage of the “good” homes. My impression is that (I don’t want to offend anybody) homes in desirable areas like Wedgewood are inhabited by people who have just retired, their kids are grown up, have left the nest a while ago and live somewhere else. Now we have these rather large houses in wonderful locations filled by only two or maybe even one person (apart from the grandchildren who are occasionally dropped off by their parents). But wait … aren’t these the baby boomers who are supposed to put their house on the market in order to have a decent retirement? Or maybe, this will never happen either? Maybe it’s just a myth. Baby boomers have made a fortune in the stock market and have always lived more frugally anyway.
For the young Seattle couple there isn’t much left other than pay an exorbitant rent for a narrow townhome at the intersection between 125th and Lake City Way or a 2 bdrm 1920 house with musty basement and glamorous original windows with virtually zero insulation. I’m exaggerating of course, but that’s what you see a lot on Craigslist. The alternative is to “emigrate” to one of the suburbs; drive until the rent is low enough?
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I have a friend who has a masters degree in engineering about your age who’s living in ballard his house is like one of those you just described. If you aren’t handy to fix something I think it’d be difficult right now in the big city with out an extra couple 100k to supplement based on average incomes.
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RE: HappyRenter @ 7 –
It depends on what you believe. If you believe property prices will now begin to go up, then those baby boomer houses will remain in the family.
However if you believe that property prices will decline over the next five to ten years then those baby boomer properties should come onto the market or be sold so the equity can be preserved.
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RE: corndogs @ 8 –
This sounds like a mukoh kind of comment.
Really? a Master’s Degree?
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By David Losh @ 10:
I have heard of this degree. Alas, my destiny was a PhD in art history with a minor in basket weaving. I am at peace with the grim fact that I am doomed to a life in the cesspool tenements.
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RE: David Losh @ 11 – What are you questioning here, the fact that he has a masters degree or that he can only afford a hovel? Or are you just popping off without thinking like usual? He probably makes 80K or 90K starting out.. 3X his income = 270K = hovel. Based on your posts I’ve seen you have a serious lack of reasoning skills. It’s good to keep your posts to short quips rather than to try to talk about real estate.
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RE: David Losh @ 10 – make no sense friend… no logic. Happy Renter.. David Losh is not a property owner nor does he understand basic economics. The exact opposite is true actually. If prices go up those properties will go on the market much more likely then if prices go down. Consistent with the laws of supply and demand..
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RE: David Losh @ 10 – sell at a loss so ‘equity’ can be preserved? …… This is fascinating… you get 2 points for using a real estate term, -12 points for not knowing what you’re talking about.
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By corndogs @ 14:
I agree he doesn’t understand basic economics. But what does it matter whether or not he owns real estate?
Prior to 2011 did Tim not understand real estate because he didn’t own any?
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RE: corndogs @ 15 – RE: corndogs @ 14 – RE: corndogs @ 13 -
Why would any one hold onto a property that is losing equity every year?
You must have an opinion in all of your Real Estate as an investment talk, but I ran the numbers on that place you posted in Gig Harbor when you were calling yourself Joe Hammy.
If I remember correctly you bought a property that is two building lots for $500K, that worked out to be $250K per building lot, and your neighbors are new construction properties that topped out at about $700K. That is a really tight purchase to call an “investment.”
How’s that as a long winded comment?
You are a waste of my time.
I think, my opinion is, that Real Estate is dead as a small time investment, but you obviously have a different opinion. If you want to express an opinion great, go ahead.
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and I forgot…
The lower tier will continue to go down because fewer places will be rehabbed, or renovated. It seems cheaper to me to tear a house down and rebuild on the lot. The Joe Hammy property is a perfect example of that. The house needs $100K worth of work, the surrounding properties are new, so there is no incentive to dump in the money to “fix” it.
People are spending money on dumpers, but they will be disappointed.
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RE: corndogs @ 15 –
I don’t think that it’s always as clear cut, like “prices are going down, let’s sell” or “prices are going up, let’s buy”, or vice versa. It’s always kind of bumpy, the market can go up today and then go down again and you can’t really predict what will happen in the next 6 months. There are always different factors that go into the decision to buy, lots of them are personal factors, as Tim has pointed out.
I’m just wondering when the time point comes that we will have a lot more listings on redfin, if that will ever happen. I hear different stories from potential sellers. Some owners still say “I would like to sell, but we would not get nearly the price that we paid for”, or “we bought this starter home but we are stuck with it because it depreciated”. But I also hear from owners who bought in the 80s or 90s and have just retired and say “we need to cash in our equity, it’s true that prices are down from the peak but we have waited long enough and we can’t keep paying for maintenance.” So, I guess that the decision to sell your home depends whether you have given up hope to get 2007 prices and you are not likely to lose money because you bought a while before the bubble. My feeling is that those who bought during the bubble and can afford it to pay the mortgage will hold onto their properties (rent them out if they can’t live in them themselves) and hope that prices will go up again. I just wonder whether that hope will fade, if prices will stay low for years to come, and these owners will eventually decide to sell their home even if at a loss. The opposite might also happen, prices might go up, in which case the decision to hold on was right. But, is there a way to predict the decay of hope as a function of time? Is it exponential or linear? ;)
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RE: David Losh @ 18 – Look at the build quality and condition on the county assessors site. The is a luxury home without any needed improvements. Upper tier people don’t deface their properties when they lose them. Since I have an instant $250K equity in the property according to all appraisal sources I could put 100K into it and still be in the black,,, luckily, unlike you, I understand economics so anything I put into it will be worthwhile. The fact that all my neighbors houses are fantastic is just another factor that bodes well for my property value. BTW, did you notice the lots 1.5 acres of view property? 15 years down the road I’ll sub-divide it and sell the lots for more than I paid for the whole property. That’s how it’s done my friend…
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RE: Kary L. Krismer @ 16 – Well, now you’re gonna make me state the obvious. Per the charts and graphs Tim is putting up himself his purchase was in the worst performing tier with relatively bad timing and he hasn’t shared any plan on how he can increase the value other than sitting on it and waiting. He has no ability to subdivide or create multiple units, so I don’t see any evidence that the charts and graphs are leading to any better understanding or decision making for Tim or anyone else on this blog. I think the guys on this site could possibly get better informed talking to an experienced real estate investor over a beer with some scribbles on the back of a cocktail coaster…
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RE: corndogs @ 20 –
It’s called obsolescence http://en.wikipedia.org/wiki/Obsolescence
I ran the numbers the last time while you were commenting as Joe Hammy, and it looked like you knew what you were talking about.
You paid top dollar, best of luck.
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RE: David Losh @ 22 – You ran the numbers did ya? or did you consult your box of rocks?
When your top dollars a 20 dollar bill I guess you’d have that opinion.
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RE: corndogs @ 23 –
Yes, I did, and there were no rocks involved.
The 20 dollar bill comment escapes me.
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By corndogs @ 21:
You seem to be pretty new around here so I guess you have missed it, but I don’t care what the “value” of my home is. I only care that I was able to purchase a home that I like in a location that I like for a price that was both affordable and fair.
I plan to actually own this home, not flip it in a few years for some imagined profit. Homes are a terrible investment unless you’re buying a rental that cash flows from day one.
As for my timing, not that it means anything to you, or that I care, but I had to have my home appraised for the refinance I just completed and the bank’s appraisal came in basically flat from where it appraised when I bought it just over a year ago ($2k increase).
But yeah, I’m an idiot and I don’t know anything about real estate. Whatever.
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RE: The Tim @ 25 – “Homes are a terrible investment unless you’re buying a rental that cash flows from day one”. Actually, it doesn’t matter if you live in it or rent it, assuming that you don’t live in grandmas basement and need to pay for housing anyway. I think you’re misapplying something you’ve heard through the grapevine or read in the ‘millionaire next door’. When people say a personal residence is not an investment, what they mean is that if you have a larger (more expensive) house than you need, all of that additional house is malinvestment. Essentially, a waste. But it makes no difference if you rent from yourself or someone else, the cost to you will be the same.
“I just completed and the bank’s appraisal came in basically flat from where it appraised when I bought it just over a year ago ($2k increase)”. Ask your mortgage broker how often a refi appraisal comes in more than 5% off the value of the purchase price within the 1st year, the answer is never. Their goal is to get your fees, the appraiser plays along if he wants to stay employed.
“But yeah, I’m an idiot and I don’t know anything about real estate. Whatever.” I didn’t say that, you did. I think you’ll find that your house was a good financial decision in the long run… II think the lower tier has a good chance to track with inflation or better in the future.
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By corndogs @ 26:
I haven’t seen a refinance appraisal for some time. What you said above was clearly true a few years ago. I’m not so sure it’s true now, but it could be.
What I’ve noticed on resale appraisals is that they are afraid to actually give an opinion of value that differs much from the sales price. If the contract price is $275,000, they will come in at $275,000 even if they might think it’s much higher than that. I’m assuming that if they think it’s much lower, then they will come in lower, but a little lower and they will still come in at the contract price.
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RE: corndogs @ 26 –
You’re a waste of time.
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RE: Kary L. Krismer @ 27 – I agree with you, my appraisal came in at 50K more than I paid, the guy couldn’t find any comparables anywhere near as low as I paid, and when you read the appraisal, you see he went to great lengths of reasoning to get it as low as he did. My mortgage broker said he’d only saw a 10% variation a few times and it was an indication that I got a really good price. All the other properties I’ve bought in the past have been basically right on the money as far as I recall. The numbers won’t come out different unless you’re quite away out of the ballpark, especially if you use the appraiser your lender tells you to.
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