Posted by: 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.

15 responses to “Case-Shiller: Home Prices End 2013 On a Dip”

  1. Erik

    I don’t think this is a dip. This is the beginning of a decline in median priced homes in king county. I warned others to sell. Now they are going to pay the price. We will be at a csi of 145 by 2016.

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  2. Kary L. Krismer

    RE: Erik @ 1 – OMG. I better sell quickly! I hope it’s not too late! /sarc

    You might be interested in knowing that the seasonally adjusted number is 160.94, UP from 159.70 in November. But in any case, the change is not statistically significant. The non-seasonally adjusted number has been basically flat for six months.

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  3. Erik

    RE: Kary L. Krismer @ 2
    Yes, there is no slope at the vertex. A correction in prices is likely since we had such a large run up in prices in 2012, 2013.

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  4. softwarengineer

    RE: Kary L. Krismer @ 2

    Yes Kary

    But if I sold at last year’s property tax assessment, I would have lost the 20% increase in this year’s King County property tax assessment…..sarc ;-)

    Like you said, the property tax assessment in King County is a joke, no wonder rents in Seattle are way too high….

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  5. Mike

    RE: Erik @ 1 – And I’m sure as soon as the spring numbers start trending up slightly you’ll claim this is one of the sine wave fluctuations you predicted.

    This is a seasonal variation. Look out the window from your new apartment in Fremont. Do you see a tidal wave of for sale signs signaling a exodus? No? Golly.

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  6. Julie Lyda RE/MAX Northwest Realtors

    The real story will be later this year as we see home prices escalate. I’ve done some new charts and see the trend of sales out-pacing new listings coming on the market. This will result in higher prices, multiple offers and bidding wars. This is already happening in the market.

    King County Home Sales Continue to Out-Pace New Listings as Critical Housing Shortage Worsens:

    We noticed an alarming trend in the Seattle real estate market over a year ago in October of 2012. For 12 months in a row, home sales had exceeded new inventory coming on the market.

    It then continued for 17 straight months until April 2013. However the net gain of inventory for that month was only a measly 9 listings. In our blog titled Housing Shortage on the Horizon in Seattle we predicted that if the trend of home sales continue to outpace new listing inventory coming on the market we would be headed for significant price increases.

    That was 28 months ago. And the trend continues.

    Click for graphs and rest of story:

    http://www.snohomishcountymarketstatistics.com/2014/02/home-sales-continue-to-out-pace-new.html

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  7. Chris

    Q13 reported this morning seattle is the 8th fastest growing city. Also, more growth in seattle proper than the ‘burbs. As info.

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  8. Erik

    RE: Mike @ 5
    I do not try to observe the data and use my own logic. Instead, I listen to people that are more knowledgeable than me. Ardell and Ray Pepper think housing prices will decrease. Tim, Corndogs, and Ira think that housing increases will approximately pace with inflation. 2/5 of the people that know a lot about real estate think prices will decrease. The other 3 don’t see a big increase in real estate prices on the horizon. Based on that, I’d say there is a good chance there will be another decrease in prices by 2016.

    The realtor above thinks that prices will go up because price is only based on inventory. This logic is wrong because that is only one factor that drives up prices. What about affordability? What if the foreclosures come back like Ray says is gonna happen? At this point, I would say that prices are probably gonna go down based on the quick run up and the comments of people on this site that know best.

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  9. whatsmyname

    RE: Erik @ 8

    “What about affordability?”
    Houses are very affordable. Check out this link on Seattle Bubble. You posted on it.
    http://seattlebubble.com/blog/2014/02/18/affordable-home-price-par-median-price/

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  10. Erik

    RE: whatsmyname @ 9
    What I meant by affordability is that in the future, interest rates will likely go up which will drive affordability will go down. If interest rates go up to 5%, that could easily negate the price increase that the agent above was predicting.

    Let me pretend to write an equation….
    C1*x+C2*y = median house price

    x=impact of affordability
    y=impact of low inventory
    C1 and C2 are constants

    There are probably more variables than that, but my point is that low inventory is not the only variable to drive up home prices. Interest rates/affordability are another factor that I am aware of. An additional factor would probably be how much people are paid in the area. We can add C3*z, where z is the impact of buyer’s salaries.

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  11. whatsmyname

    RE: Erik @ 10
    Interest rates will almost surely go up. Incomes too at some point. Is 5% really a trigger for decline? I don’t know. I don’t think so, and I will tell you why.

    Tim’s chart shows that the median income could (if desperately motivated) buy the median house. But the median income only needs to match the median housing option. Those options include renting, condo’s and staying in a house you couldn’t afford to buy on your income, but you had for a long time. Ignoring wealthy renters and condo owners (for simplicity), if the bottom 40% are in that other housing market, then the median house really matches up with the 70th percentile income (40 + 30). Conversely, the median income only properly matches up with the bottom house-for-sale quartile. With median income matching ability to handle the full quartile above that, there is a huge cushion in affordability for those who are motivated or unworried. It can absorb significant affordability declines if people are wanting to buy. So the driver here will be psychology.

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  12. ARDELL

    RE: Erik @ 8

    I don’t think they will go down in 2015. I said if you are thinking down…your first opportunity would more likely be in an election year of 2016. If it is going to go down at all in the near future, that would be the year, other than normal seasonal 4th quarter activity.

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  13. boater

    Interest rates constantly get brought up without including the likely wage inflation that will come with them. Right now Seattle is debating a raise in the minimum wage to $15/hr. No one on the council is opposed to it. The mayor is for it. The only debate is who might get excluded. That’s serious wage inflation going on right now vs the spectre of interest rates rising sometime maybe soon maybe a few years from now.
    I suspect minimum wage will increase rents at the low end and home prices at the low end.

    Mostly from investors buying cheap houses to rent to minimum wage workers.

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  14. Julie Lyda RE/MAX Northwest Realtors

    RE: Erik @ 8

    Eric, just to clarify on my post of escalating prices. This is my outlook for 2014. It’s difficult to forecast much beyond that, because you are right…. prices are affected by more than just lack of inventory.

    The point I was making is this is what is “happening now”.

    Interest rates are projected to start rising later this year…. however, we’ve all heard that before.

    Home prices are affected by many things like:

    Interest Rates
    Supply/Demand
    Economic conditions
    Wars
    Political Elections

    We just don’t have any of those in play at the moment. Who’s to say what will happen in 2015.

    I am concerned that prices are rising too rapidly. I don’t think it makes for a healthy market and erodes affordability. We could easily see a pull back… I just don’t think that it will happen this year.

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  15. rainbow

    I think Julie may be correct here. King county inventory is going in the opposite direction. negative growth. But we are talking Feb.

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