Case-Shiller Tiers: Low Tier Leads March Price Increases

Case-Shiller Tiers: Low Tier Leads March Price Increases

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: < $271,660 (down 2.7%)
  • Mid Tier: $271,660 – $435,955
  • Hi Tier: > $435,955 (down 0.8%)

First up is the straight graph of the index from January 2000 through March 2014.

Case-Shiller Tiered Index - Seattle

Here’s a zoom-in, showing just the last year:

Case-Shiller Tiered Index - Seattle

After turning in the weakest performance in February, the low tier shot up to the top in March Between February and March, the low tier increased 2.3%, the middle tier rose 2.1%, and the high tier gained 1.8%.

Here’s a chart of the year-over-year change in the index from January 2003 through March 2014.

Case-Shiller HPI - YOY Change in Seattle Tiers

Year-over-year changes slipped further for the middle and high tiers, but increased for the low tier. Here’s where the tiers sit YOY as of March – Low: +18.1%, Med: +12.7%, Hi: +10.4%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers

Current standing is 25.2% off peak for the low tier, 17.3% off peak for the middle tier, and 12.3% off peak for the high tier.

(Home Price Indices, Standard & Poor’s, 05.27.2014)

  

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.

18 comments:

  1. 1

    Low Tier Seattle Fixers

    Some additional Comments on Charts:

    1.Looks like Normal Spring Bounce [for all tiers] on your zoom in 2nd chart.
    2. 3rd Chart looks like all tiers slipped YOY on prices.
    3. The 4th Chart documents why “underwater” loans are still with us, lower tier still 28% from peak.

    The trends in YOY slippage are especially meaningful “during Spring Bounce[?]” as follows:

    “…The housing market is a cycle that needs buyers coming in at the bottom so others can move up, says Sturtevant. If that chain breaks down out at any point — because of low supplies, tight lending requirements, or the absence of new buyers due to college debt, low wages or some other reason — that can affect the whole cycle, says Sturtevant….”

    http://finance.yahoo.com/blogs/daily-ticker/the-growing-wealth-divide-in-the-u-s–housing-market-135923446.html

    Personally, I’d take the “or(s)” out of the “overly optimistic [pessimistic to future buyers]” above news article snippet and replace it with “and(s)”.

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  2. 2
    Blake says:

    Interesting that the low tier seesm to be catching up here now…? Check out this piece by David Stockman looking at the sales of the top 1% homes (up up up!) vs. the bottom 99% (down…)
    http://davidstockmanscontracorner.com/janet-heading-down-for-everyone-else/
    … “Among homes sold to the top 1% of households, volume is up by 20-100% in most markets. By contrast, transaction volume during the last four months was down for the entire remaining 99% of the market in 26 out of 30 cities. And the bottom 99% volume was off by double digit amounts in places like Phoenix, Orange County and Los Vegas.”

    ** Also has a nice bar graph of the 2014 Growth in the Number of Homes Sold: Top 1% vs. Other 99% broken down by city (from Redfin)

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  3. 3
    Mike says:

    RE: softwarengineer @ 1 – With most of the underwater and delinquent houses in the low end, inventory should remain tight as these houses fall into disrepair and become uninhabitable. Low end buyers will have to show up to bidding wars with an array of weapons to fight to the death for the few homes available. Another option is to start and underground vigilante eviction group to encourage home squatters to leave.

    I can see either making a great reality TV series for the ‘high tier’ buyers to enjoy when they take a break from renovating their $700K Greenlake fixer-uppers.

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  4. 4
    Erik says:

    Oh how I dream of the day that I am high tier. I will drive home in my Maserati and greet my trophy wife and dog named Bingo. I will then pour myself a drink of Johnny Walker Blue Label on the rocks. I will kick back in my recliner and pull out my ipad and talk smack on Seattlebubble. While all the angry commenters are fighting over what they thought another person said, I will be smiling with a breeze blowing through my hair as I nod off for a while.

    For now I am holed up in a little studio apartment where I am just trying to keep the lights on, but my luck is about to change friends. Next remodel will take a year. After that, it’s on like Donkey Kong. 2-3 month flips all with hard money. I will change my screen name to Erik the Real Estate Mogul.

    I was open about everything regarding my last and first successful real estate transaction. I saw it an believed it would happen. Being able to see the success and believe it will happen is the hard part. I see it and believe it. The rest is details.

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  5. 5
    whatsmyname says:

    RE: Erik @ 4
    Next lesson for Erik: How did those hard money guys get all that money?

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  6. 6
    Erik says:

    RE: whatsmyname @ 5
    They made a plan that they felt would make them money. They visualized the details of their plan and how they would take advantage of people that are less fortunate and need the cash. Then they executed it. They actually followed through. Borrowers tried to run off with the loot and I am sure the hard money lenders tracked them down and made them wish they didn’t run.

    That’s how it’s done. Most people get rich because their dad helped them out, which seems to be the case most of the time. If you want too go from poor white “fun” from the mean streets of north everett like myself to independently wealthy, you need to take risks and get a little lucky. Make big moves. If those moves don’t work, try it again.

    My guess is they inherited the initial money to get them started from their father. That is the common theme with money. It gets passed down.

    Do you think that saving up your bi-weekly check on a $100k salary job will get you rich? Maybe when you are 62. By the time i am that old, I won’t have nearly the fun with my money as I could have now. I don’t want to be an old croggy rich guy that lived a lame life because he was worried about saving every penny and not having as much fun as a result. If you can tell me how to get rich in the next 5 years, I am all ears.

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  7. 7
    Kmac says:

    Seattle Region March Home Sales

    Seattle-area March home sales fell short of a year earlier as an increase in both high-end activity and condo resales failed to offset an overall decline in sub-$500,000 transactions. Price appreciation showed signs of throttling back, with the median sale price rising year-over-year at the slowest pace in 22 months, a real estate information service reported.

    A total of 4,367 new and resale houses and condos closed escrow during March in the Seattle-Tacoma-Bellevue metro area encompassing King, Snohomish and Pierce counties. Seattle-area sales rose 26.1 percent from the prior month and fell 4.3 percent from a year earlier, according to San Diego-based DataQuick. The firm tracks real estate trends nationally via public property records.

    An increase in sales between February and March is normal for the season. On average, sales between those two months have risen 37.0 percent since 1994, when DataQuick’s complete Seattle-area statistics begin.

    March was the second month this year to log a year-over-year decline in total sales. In January sales fell 1.3 percent year-over-year. February sales rose 3.6 percent from a year earlier. However, condo resales have increased year-over-year for the past two months, rising 22.1 percent in February and 2.8 percent this March, when 869 condos resold – the highest for a March since 969 condos resold in March 2007.

    Total March home sales were 14.0 percent below the average number of homes sold in all months of March since 1994. Sales of existing (not new) single-family detached houses were 16.5 percent below the historical March average, while condo resales were 31.2 percent above average and sales of newly built homes were 36.4 percent below the March average.

    Buyers paid a median $315,000 for all new and resale houses and condos sold in the three-county Seattle area in March, up 0.3 percent from the prior month and up 6.8 percent from a year earlier. It was the lowest year-over-year gain since the median rose 6.5 percent in May 2012. Over the past year the highest monthly median was $329,000 in July 2013.

    read more:
    http://www.dqnews.com/Articles/2014/News/Seattle/RRKIWA140509.aspx

    there seems to be a lot of conflicting info floating around

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  8. 8
    Christian Wathne says:

    By softwarengineer @ 1:

    2. 3rd Chart looks like all tiers slipped YOY on prices.

    No, it shows that all tiers gained between 10 and 18% YOY, nothing slipped. Prices are rising incredibly fast.

    I’m predicting that over the next 12 months YOY gains will remain in the healthy end of the positive zone, but closer to the 5-10% yoy gain range; 10-20% yoy increases for housing is unsustainable for very long.

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  9. 9
    mike says:

    RE: Erik @ 4 – According to DQ, that’s where the action is:

    “The number of homes selling in middle and up-market price categories tended to rise or flatten in March compared with a year earlier, while sales of lower-cost homes fell. The number of sales in March below $200,000 dropped 23.1 percent year-over-year, while sales below $500,000 fell 6.9 percent. Sales above $500,000 rose 3.8 percent year-over-year, while home sales over $700,000 increased 15.5 percent.”

    The presumed lack of move-up buyers doesn’t seem to be having much effect on demand, even though it’s supposedly been going on for 7 years at this point. To me, this is just more evidence that we’re in a heavily bifurcated market.

    Lol @ high tier buyers driving Maseratis. Try Subarus.

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  10. 10

    RE: Mike @ 3

    Or A More Cost Effective Choice

    Why rehabilitate a Seattle area “Museum Piece”…..no matter how much you throw at this type of money pit….its never enough and still lacks modern building standards of proper insulation, storage and bathrooms…

    Bulldoze it and start over makes far more economic sense.

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  11. 11

    RE: Erik @ 6

    Many Multiple Home Buyers are Billionaires the H2 TV Series “America’s Book of Secrets ” Revealed

    They buy an upper tier neighborhood out, rather than living in one giant mansion fortress, to hide their real wealth from the potentially screaming bottom 90% mobs….

    They drive cheaper cars for the same reason….they’re scared for their security.

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  12. 12

    RE: Kmac @ 7

    WOW…Interesting Statistics

    Seattle average sales price numbers going down….the solution: buy real cheap and sell cheap too, if you’re a flipper. Profits to be made for those that aren’t greedy. As the general conditions of Seattle area “available stock” homes deteriorate from neglect by those waiting for higher prices with no remodeling funds….but suddenly forced to sell….more buyers will sit renting for better stock. This drives up rents though.

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  13. 13
    Blake says:

    By Christian Wathne @ 8:

    By softwarengineer @ 1:
    2. 3rd Chart looks like all tiers slipped YOY on prices.

    I’m predicting that over the next 12 months YOY gains will remain in the healthy end of the positive zone, but closer to the 5-10% yoy gain range; 10-20% yoy increases for housing is unsustainable for very long.

    OK, 10-20% yoy increases are unsustainable, but how are 5-10% yoy price gains for housing sustainable when real median incomes are stagnant or declining?
    http://research.stlouisfed.org/fred2/series/MEHOINUSA672N

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  14. 14
    boater says:

    RE: Blake @ 13

    Because homes are not being traded by folks in the lower half of the median income. we’re talking maybe 100,000 or so homes possible trading hands inside Seattle proper. realistically we are talking maybe 5-10% of that number. The folks buying those homes have much higher than median income. They may actually be getting 5-20% annual raises. I know when I was working in tech that was the norm for me. These are the buyers. The folks on the bottom half of the median explain why outside Seattle you see much lower or negative appreciation. There are two totally separate economies going on and looking at the poorly performing one to explain the better performing one is never going to work.

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  15. 15

    RE: boater @ 14

    “Because homes are not being traded by folks in the lower half of the median income…”

    Remember the facts are SIGNIFICANTLY skewed by the fact that MANY, MANY people who are trading up, are doing that from a condo or townhouse vs a very low priced single family home. Given most all data on SB does not include any of the lower priced properties being sold in order to buy SFH, merely because they are not SFH properties, skews the data and what you are saying.

    Clearly the fact that many of the “homes”…”being traded by folks in the lower half of the median income…” are condos and condo-townhomes which are not in these numbers, changes what you are saying. Many if not most of the lowest priced SFH are not being sold by move up buyers, because many move up buyers are coming from a “home” that is simply not counted.

    Virtually all of the lowest priced single family homes (say under $150,000) are rentals, estates, and in grave disrepair. Not the stuff a “move up” is made of.

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  16. 16
    Erik says:

    RE: softwarengineer @ 11
    Precisely the reason I drive a 300k mile vehicle and live in a dumpy studio. I don’t want mobs of poor people trying to get my cash.

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  17. 17
    Blurtman says:

    RE: Erik @ 4 – Eric, You’ve described my life to a T. Add the smoking jacket and streaming financials, coerced undocumented Salvadorans, and there you go.

    Muffy and I are contemplating a quail hunt, and were wondering if you’d join us. It’s bloody decent money, and the bullet holes usually are on their way to healing in three weeks or so. What’s your sprint speed, BTW?

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  18. 18
    Christian Wathne says:

    By Blake @ 13:

    By Christian Wathne @ 8:
    By softwarengineer @ 1:
    2. 3rd Chart looks like all tiers slipped YOY on prices.

    I’m predicting that over the next 12 months YOY gains will remain in the healthy end of the positive zone, but closer to the 5-10% yoy gain range; 10-20% yoy increases for housing is unsustainable for very long.

    OK, 10-20% yoy increases are unsustainable, but how are 5-10% yoy price gains for housing sustainable when real median incomes are stagnant or declining?
    http://research.stlouisfed.org/fred2/series/MEHOINUSA672N

    Because median income people are not the buyers of Seattle area homes, its people in higher income groups. In cities like LA, San Fran, or Seattle where there are an abundance of high earners willing to pay more for homes, it is those people who drive up home prices. Service industry and retail workers (likely close to half the workforce?) affect the median income, but do not play a significant role in the market for single family home purchases.

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