Posted by: Timothy Ellis (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.

27 responses to “Case-Shiller: January Home Prices Calm Before the Storm”

  1. David Losh

    The price hikes don’t impress me. The multiple offers are a sign of exuberance.

    When you take the price increases from Year over Year, and look at how far prices fell from the peak, it isn’t any real surprise that we still have people comparing prices to 2005.

    Let’s take Phoenix were after the crash properties were selling for half the price they are today. Banks were dumping properties on the market, and “investors” were scooping them up for rental income.

    As interest rates fell these same investors were willing to pay more and get the same rental income based on rent to mortgage payment.

    So I don’t see the price hikes as significant. We are in a manipulated market place of bank owned, low-interest rates, and massive infusions of corporate investor cash purchases.

    I’m still interested in what the Fed will do as an exit strategy. I’m thinking 2014 we will see a Real Estate market place based more in reality.

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  2. toad37

    RE: David Losh @ 1

    It will indeed be interesting to see if the Fed even has an exit plan.

    Rate this comment: Thumb up 0

  3. softwarengineer

    RE: David Losh @ 1

    So True David

    We spend a MASSIVE amount of debt to banksters on creating this fantasy, and meanwhile butcher axed Medicaid’s dental from the poor and disabled….they want MASSIVE Social Security cuts [just like Cypress bank accounts are being robbed] when the Baby Boomers all paid in more into Social Security than they could ever draw out, even in ripe old ages.

    The “they” don’t depend on Social Security BTW.

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  4. Erik

    RE: David Losh @ 1
    Tim said in 2012 that we would be in turbulent times for 3-5 years. From that, I think we will see more reality anywhere from 2015-2017.

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  5. Captain Kirk

    By toad37 @ 2:

    RE: David Losh @ 1

    It will indeed be interesting to see if the Fed even has an exit plan.

    Bernanke is very defensive of the low interest rates.

    http://seattletimes.com/html/businesstechnology/2020640360_bernanketradexml.html

    I would be very interested to see just how high they’re willing to allow interest rates to crawl back up and how fast. Either way, it looks like higher rates won’t come until there’s lower unemployment. Because so much unemployment is tied in way way or another to the housing, the 2 are mutually exclusive. Our economic “recovery” (if you call it that) is uneven because of this. I wouldn’t expect any sudden changes anytime soon.

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  6. David Losh

    OK, this article is one of several over the past few weeks that talks about the Fed easing up on Quantitative Easing as a way to boost the economy. This article talks about the wealthy getting more than the person on the street: http://www.cnbc.com/id/100589198

    This article talks about the exit strategies that may be available, but they have consequences: http://www.cnbc.com/id/100569744

    I particularly don’t care what the consequences are, because we will need to have a correction, one way, or another.

    We aren’t getting inflation, but we could find higher employment if corporations are forced to produce rather than collect profits from speculation.

    I just think there is a ton of cash in our system, and that cash needs to go to work. We are getting more cash from Europe as the banking system there gets further in disarray.

    There is money to be made, I just think the Fed has done all it can. If the Fed continues they will only dig a deepar hole.

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  7. Ron

    Here’s a little humor…I’m sure it has some impact on RE but I’m not sure how just yet!

    Dear Red States:
    We’re ticked off at your Neanderthal attitudes and politics and we’ve
    decided we’re leaving.

    We in New York intend to form our own country and we’re taking the
    other Blue States with us.

    In case you aren’t aware that includes California, Hawaii, Oregon,
    Washington, Minnesota, Wisconsin, Michigan, Illinois and the rest of
    the Northeast.

    We believe this split will be beneficial to the nation and especially
    to the people of the new country of The Enlightened States of America
    (E.S.A).

    To sum up briefly:

    You get Texas, Oklahoma and all the slave states.

    We get stem cell research and the best beaches.

    We get Andrew Cuomo and Elizabeth Warren. You get Bobby Jindal and Todd
    Akin.

    We get the Statue of Liberty. You get OpryLand.

    We get Intel and Microsoft. You get WorldCom.

    We get Harvard. You get Ole’ Miss.

    We get 85 percent of America ‘s venture capital and entrepreneurs.

    You get Alabama.

    We get two-thirds of the tax revenue. You get to make the red states
    pay their fair share.

    Since our aggregate divorce rate is 22 percent lower than the
    Christian Coalition’s, we get a bunch of happy families. You get a
    bunch of single moms.

    With the Blue States in hand we will have firm control of 80% of the
    country’s fresh water, more than 90% of the pineapple and lettuce, 92%
    of the nation’s fresh fruit, 95% of America’s quality wines (you can
    serve French wines at state dinners) 90% of all cheese, 90 percent of
    the high tech industry, most of the US low sulfur coal, all living
    redwoods, sequoias and condors, all the Ivy and Seven Sister schools
    plus Harvard, Yale, Stanford, Cal Tech and MIT.

    With the Red States you will have to cope with 88% of all obese
    Americans and their projected health care costs, 92% of all US
    mosquitoes, nearly 100% of the tornadoes, 90% of the hurricanes, 99%
    of all Southern Baptists, virtually 100% of all televangelists, Rush
    Limbaugh, Bob Jones University, Clemson and the University of Georgia.

    We get Hollywood and Yosemite, thank you.

    38% of those in the Red states believe Jonah was actually swallowed by
    a whale, 62% believe life is sacred unless we’re discussing the death
    penalty or gun laws, 44% say that evolution is only a theory, 53% that
    Saddam was involved in 9/11 and 61% of you crazy bastards believe you
    are people with higher morals then we lefties.

    We’re taking the good weed too. You can have that crap they grow in Mexico.

    Sincerely,

    Citizen of the Enlightened States of America

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  8. toad37

    RE: David Losh @ 6

    What makes you think we aren’t getting inflation? Have you been to a grocery store lately?

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  9. doug

    The best investments right now are
    1- The US Dollar
    2- Food Stocks
    3- Real Estate

    We are in a Gold, Guns, Canned good’s bull market and in guns right now. I fully expect food prices to rise but the fascinating thing will be with little inflation as other things in the index like oil and gold will fall as they are in a massive bubble. THe US dollar will rally and once again be the currency to own as the Euro collapses. Beyond that well real estate aint go any lower than it is now,,, in fact real estate is as low as it will be for the rest of our lives.

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  10. pfft

    By toad37 @ 2:

    RE: David Losh @ 1

    It will indeed be interesting to see if the Fed even has an exit plan.

    the Fed has explained it’s exit plan a bunch of times.

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  11. whatsmyname

    “Prices Calm Before the Storm”?

    Please elaborate on your view of the coming storm.

    Thanks,

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  12. pfft

    By toad37 @ 8:

    RE: David Losh @ 6

    What makes you think we aren’t getting inflation? Have you been to a grocery store lately?

    why does every single person who questions inflation always say that. are you all reading the same source?

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  13. whatsmyname

    RE: Ron @ 7
    Secession now! Woo hoo, the North will rise again.
    In fairness, we should be prepared to offer Puerto Rico type status to Idaho and Montana

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  14. toad37

    RE: pfft @ 12

    I’m not questioning inflation.

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  15. whatsmyname

    I love the interactive case schiller data graph. I take out tim’s picks, and replace them with Atlanta, Charlotte, Cleveland, Dallas, Denver, Detroit.

    Poof. Where’d that bubble go?

    Rate this comment: Thumb up 0

  16. Scotsman

    RE: Ron @ 7

    Typical liberal thinking; short term, all play, no work.

    We Red Staters get all the high protien food people need, most of the carbs, and the usable (and exportable!) oil/gas energy. You get coal- but your government won’t let you use it. We’ll also get less government, less regulation, lower taxes, more freedom to innovate AND all of the best snow skiing.

    When you are cold/hot and starving we will trade real food and energy at prices we dictate for what ever we want. Maybe even some fruit- you’ll be sick of it by then. But your government won’t let you raise or eat meat, so . . .? Your Microsofts, etc. will leave you for our lower taxes, your scientists and innovators will leave for our less oppressive/restrictive government, while those who suck off the teat of the system and produce nothing will stay with you for the free sh*t. Eventually all of you will essentially be living in Detroit while we vacation around the world.

    Sucks to be blue. ;-)

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  17. Scotsman

    RE: Scotsman @

    One more thing- we’ll get all the wind and solar power you crave. More oil and gas to sell, more vacations to take.

    Life’s hard. It’s really hard if you’re stupid. ;-)

    http://hint.fm/wind/

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  18. whatsmyname

    By Scotsman @ 16:

    We Red Staters get all the high protien food people need, most of the carbs, (Explains the 88% of the obese), and the usable (and exportable!) oil/gas energy (No, you’ll need that to fuel the 1978 Crown Victorias, which is all that the 98% wage-slave portion of your population can afford to commute with/live in). You get coal- but your government won’t let you use it. (Luckily, we have California and good relations with Canada) We’ll also get less government, less regulation, lower taxes, more freedom to innovate (which has made the red states the paradise that they are today) AND all of the best snow skiing. (OK, you got me there)

    When you are cold/hot and starving we will trade real food and energy at prices we dictate for what ever we want. (porno mags and NASCAR stickers? We can do that.) Maybe even some fruit- you’ll be sick of it by then. But your government won’t let you raise or eat meat, so . . .? Your Microsofts, etc. will leave you for our lower taxes, your scientists and innovators will leave for our less oppressive/restrictive government, (It’s a wonder they haven’t migrated there yet), while those who suck off the teat of the system and produce nothing will stay with you for the free sh*t. (Don’t be silly; you’ll still have Rush and the Bush’s) Eventually all of you will essentially be living in Detroit while we vacation around the world. (If I lived in a red state, my goal would also be moving location to another part of the world)

    Sucks to be blue. ;-)

    Sounds like we have an agreement. When can we close?

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  19. Scotsman

    RE: whatsmyname @ 18

    Wait- while searching for income stats I found this: Who has the highest 2010 per-capita income by almost a factor of two? Looks like the jokes on all of us:

    http://www.infoplease.com/ipa/A0104652.html

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  20. David Losh

    RE: toad37 @ 8

    What we have is investment in commodities, and asset, like Real Estate, for quick returns on historically low interest rates.

    Large investors borrow at near zero, buy up commodities, and assets, then cash in as prices rise.

    Oil is my pet peave, because demand isn’t what it used to be, but the price of gas keeps rising. The price of gas, diesel, drives up the price of everything.

    Inflation is where the dollar is devalued, but with what is happening in Europe, and China, the dollar looks pretty strong.

    We would need wage increases which aren’t happening. We would need a stronger economy based on goods, and services outside of finance to make the economy more solid.

    For all of the trillions of dollars the Fed has dumped into the economy you would expect hyper inflation which never came. We will have some form of deflation to correct the mess we have have.

    I don’t see a crash, but we should be able to get a soft landing from a slight rise in interest rates.

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  21. Blurtman

    RE: Ron @ 7 – Harvard? No thanks!

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  22. wreckingbull

    RE: Ron @ 7 – While political humor, that essay that has been working its way around the web and email inboxes does display an ignorance of US demographics.

    http://en.wikipedia.org/wiki/Purple_America

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  23. wreckingbull

    By David Losh @ 20:

    Oil is my pet peave, because demand isn’t what it used to be, but the price of gas keeps rising. The price of gas, diesel, drives up the price of everything.

    Incorrect. You are confusing US oil demand with global oil demand. Global oil demand continues to grow. Oil and its refined derivatives are traded in global markets.

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  24. David Losh

    RE: wreckingbull @ 23

    Technically correct, it was a cut in production in OPEc which caused the price increases. The global economy was much more robust in 2008 than it is today.

    http://www.eia.gov/forecasts/steo/report/global_oil.cfm

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  25. Ron

    RE: Scotsman @ 16

    Seattle is super-blue which is why I love living here. They would hang me from the nearest tree in many parts of this wonderful country…:)

    I put a rental of mine in Oregon on the market earlier this week in hopes of taking advantage of this market. I think most people are surprised at the relatively swift RE rebound and unprepared to list which is why supply is low. I’ve never sold a home before and cannot believe how much time it took to prep. Until prices really start to rise, my guess is that most potential sellers will sit on the sidelines.

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  26. DMac

    Ron – I recently moved to Portland, and a similar dynamic is playing out here in reference to the Seattle market, albeit on a much smaller scale. There is little to no inventory in the city proper, many homes still in shadow inventory, and banks are not releasing their properties. There are still too many erstwhile sellers who are currently underwater, and you can see it in the MLS listings every month – the same properties are listed at the same prices, and then summarily taken off, only to be re – listed again in a few months at the same price. Makes no sense unless your conclusion is accurate.

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  27. Foreclosures Benefit a Neighborhood, Not Hurt It • Seattle Bubble

    [...] At the national level, consider the markets that were the hardest-hit by foreclosures after the bubble burst. Las Vegas and Phoenix were both overwhelmed with foreclosures a few years ago, and yet today they are experiencing some of the largest price gains in the nation—15% and 23% year-over-year as of the latest data from Case-Shiller. [...]

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