Case-Shiller: Seattle-Area Home Prices Surged In February

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to February data that was released this morning, Seattle-area home prices were:

Up 1.9 percent January to February
Up 12.2 percent year-over-year.
Up 10.0 percent from the July 2007 peak

Over the same period a year earlier prices were up 1.1 percent month-over-month and year-over-year prices were up 10.7 percent.

Seattle home prices as measured by Case-Shiller shot up yet again to a new all-time high in February.

Here’s a Tableau Public interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities. Check and un-check the boxes on the right to modify which cities are showing:

Seattle’s rank for month-over-month changes jumped up from #3 in January to a strong #1 in February.

Case-Shiller HPI: Month-to-Month

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 metro areas.

Seattle’s year-over-year price growth edged up once again from January to February, hitting its highest point since February 2014. Yet again in February, none of the twenty Case-Shiller-tracked metro areas gained more year-over-year than Seattle. From February through August of last year, Portland had been in the #1 slot above Seattle.

Don’t worry, the Northwest will always and forever continue to be literally the envy of other states.

Seven cities hit new all-time highs again in February: San Francisco, Denver, Boston, Charlotte, Portland, Dallas, and Seattle.

Here’s the interactive chart of the raw HPI for all twenty metro areas through February.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve metro areas whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak

In the 115 months since the price peak in Seattle prices are up 10.0 percent.

Lastly, let’s see how Seattle’s current prices compare to the previous bubble inflation and subsequent burst. Note that this chart does not adjust for inflation.

Case-Shiller: Seattle Home Price Index

Check back tomorrow for our monthly look at Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 2017-04-25)


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.

299 comments:

  1. 251
    Deerhawke says:

    I have rental housing and for-sale housing in Seattle so i get to have a window into both worlds.

    Rental housing peaked in August of 2016. Rents on the kinds of houses that this particular petit rentier oppressor of the working classes owns have dropped by about 6-8%. Not sure if others are finding this also, but prices have definitely softened. The main reason is that there are a lot of rental units coming on the market and many are offering a month of free rent and other inducements. Free parking, free storage unit, etc.

    For sale housing in and around the city continues to be crazy. Multiple offers, waived contingencies, all cash offers, bids up to 45% above asking price. You name it.

    Economic theory on substitute goods says that there should be more interplay between these two markets, but not so far.

  2. 252

    [Topic: Active Listings, Rentals and Interaction Between Them.]

    By Deerhawke @ 249:

    Rental housing peaked in August of 2016. . . . The main reason is that there are a lot of rental units coming on the market and many are offering a month of free rent and other inducements. Free parking, free storage unit, etc.
    . . .
    Economic theory on substitute goods says that there should be more interplay between these two markets, but not so far.

    Undoubtedly the new construction and incentives they do to fill up are affecting things, but I wouldn’t assume there’s as little interaction as you seem to believe. Renters becoming owners would put downward pressure on both rents and the supply of houses for sale.

  3. 253
    Brian says:

    RE: Kary L. Krismer @ 248

    We have a historical shortage of active listings and rents have been climbing through the roof, but no, there’s not a shortage of housing units. It’s all made up! /sarc

    Really? Supply for sale has nothing to do with how much supply we have in total. Supply can be reduced if investors buy multiple homes and hold onto them. Then the tidal wave of supply can be unleashed if those investors get spooked and decide to sell. The point we’re trying to make is that it seems like we’re not as under-built as some would like us to believe.

  4. 254

    RE: Deerhawke @ 249

    The new construction townhomes, behind Showgirls Lake Forest Park, sold its first phase last year pretty much at asking across the board. They just opened up two units for sale right next to the Showgirls parking lot, plus a third one from phase one that came back on market. Even though the 2017 asking prices were much higher, they still received 25+ offers on the 3 units and all bid up over asking.

    So it would seem 2017 is different than 2016. Of course I have seen this in hot neighborhoods, but this one next to Showgirls parking lot was a bit surprising. Both of those not completely built yet were 4 bedroom, free standing, townhomes with two car garages. I do think there is a huge demand for 4 bedroom detached townhomes near bus lines.

    Hard to do a straight line appreciation last year to this year as many of the ones sold in Phase 1 where not similar in size or street position. Even the detached ones from last year not necessarily a good comparison when looking for price difference due to product difference vs appreciation.

    I expect the next ones to sell even higher than these did. I can’t reveal too much inside info, but a good example of where the market is right now, as this all happened a couple of days ago.

  5. 255

    [Topic: Supply]

    By Brian @ 251:

    RE: Kary L. Krismer @ 248

    We have a historical shortage of active listings and rents have been climbing through the roof, but no, there’s not a shortage of housing units. It’s all made up! /sarc

    Really? Supply for sale has nothing to do with how much supply we have in total. Supply can be reduced if investors buy multiple homes and hold onto them. Then the tidal wave of supply can be unleashed if those investors get spooked and decide to sell. The point we’re trying to make is that it seems like we’re not as under-built as some would like us to believe.

    I’ve mentioned in the past how small a percentage of houses are on the market relative to the number of units, and specifically how few people want to sell at any given time. And I’ve specifically pointed out that the number of houses on the market at any given time is not the “supply” if you’re talking about supply in an economic sense. So I agree with you to some extent.

    But when you’re dealing with statistics like the ones presented it really isn’t that useful to look at total inventory (the term I would use rather than supply) because I don’t believe they really break it down at all. Correct me if I’m wrong, but aren’t these apartments, condos, duplexes and SFR houses? That’s perhaps useful if you’re just looking for a roof over your head, have nearly unlimited resources and would accept anything from a mother-in-law unit in Carnation to a multi-million dollar house in Seattle on Lake Washington.

    Focusing on the SFR market, I would go so far as to say the number of new construction units the past X years isn’t that meaningful either, because a lot of those properties are being built in places and densities that many/most people are not interested in.

    That said, I’d agree that there is a real possibility of builders over-shooting and/or people leaving the area at significant rates, thereby creating an imbalance in the market far different than what we have today. For builders it’s because their process takes so long from inception to completion. For people leaving, that could be any of dozens of causes.

  6. 256

    RE: Brian @ 253 – BTW, I would also add they’ve been building housing units in King County for over 100 years. Absent some huge event it’s not likely to get that far out of balance one way or another. Cars would be a less extreme example, because they do have a more limited life, but with cars you do have periods where manufacturers and dealers are starving and periods where things are really booming, but the total number of cars on the road probably doesn’t fluctuate much at all.

    I’d also note that there is a large homeless population, although some of them apparently prefer to live outdoors if you believe recent news reports.

  7. 257
    Erik says:

    RE: Ardell DellaLoggia @ 254
    I just got a 2br condo near that same Showgirls. That area will be great for light rail and bus service to the east side. Kind of a lower end area, but I think it’s up and coming.

  8. 258
    Erik says:

    RE: Deerhawke @ 251
    Are you saying it’s a bad time to buy more rentals?

  9. 259
    Sea says:

    By Erik @ 226:

    RE: justme @ 219
    Right. I’m betting prices continue upward for 7 years.

    Sounds like a ton of risk in that bet but if you believe this to be the case and you think prices will double from 2017 levels as you stated in another post, are you predicting no economic downturn during this time? Will rents also double? Are you projecting significant rise in incomes. A doubling would require an average of 14% appreciation for the next 7 years. , quite ambitious!

    What your doing and predicting (buying properties that don’t cash flow) is similar to what a lot of us did pre 2008. Are you opposed to a buy and hold strategy and paying the properties off, or perhaps you plan on selling a few to pay off the ones you keep?

  10. 260
    justme says:

    RE: Brian @ 253

    >>Supply for sale has nothing to do with how much supply we have in total.

    Exactly. I will also add that any supply that is not owner-occupied, and also is not for sale, is supply that is for rent. In other words, less units for sale means more units for rent.

    But…but…but…but…Chinese Buyers!, the bubblers will undoubtedly say. Well, the Chinese speculators are getting their asses handed to them in Vancouver and now also Toronto. As of April 2017, the new 15% transfer tax law now also in effect in Toronto. Cheers.

  11. 261
    ess says:

    By Deerhawke @ 251:

    I have rental housing and for-sale housing in Seattle so i get to have a window into both worlds.

    Rental housing peaked in August of 2016. Rents on the kinds of houses that this particular petit rentier oppressor of the working classes owns have dropped by about 6-8%. Not sure if others are finding this also, but prices have definitely softened. The main reason is that there are a lot of rental units coming on the market and many are offering a month of free rent and other inducements. Free parking, free storage unit, etc.

    For sale housing in and around the city continues to be crazy. Multiple offers, waived contingencies, all cash offers, bids up to 45% above asking price. You name it.

    Economic theory on substitute goods says that there should be more interplay between these two markets, but not so far.

    Perhaps there is a large disconnect between the two classes of individuals? A renter living paycheck to paycheck is going to be in a much different financial situation than the wealthy who can afford to not only buy a residence with all cash, but overbid and ignore all protective contingencies when doing so. That scenario was played out in Vancouver where the few uber rich purchased the single family housing stock, while the middle class was left to purchase condos in Vancouver proper, or move further out in order to purchase a house. And when I was recently in Vancouver going to some open houses and condos, it did not appear that the rents were in line with the prices of both single family housing or the price of the condos.

  12. 262
    SeaTownDweller says:

    RE: justme @ 260 – Actually Chinese speculators are not getting their asses handed to them in Vancouver, and no data proves that either for Toronto, so can you source the basis of your claim? Chinese deem real estate a safe haven, but they tend to follow (and then become) the real estate trend, rather than pioneering it. So this Seattle market started out with employment boom, then herd mentality brought people in to drives that bubble. But I ask you, so what if there is a bubble and price keeps going up, what’s wrong with riding the wave and collecting profit at some point? Are you saying that within this year the bubble is popping?

  13. 263

    [Topic: NWMLS Statistics]

    What I was alluding to yesterday was the April median for King County SFR. It’s actually lower than I thought it would be at $625,000. I saw it as high as $640,000 early on. Think about that–it’s about 100,000 above where we started the year. The sales though were very constrained, so that could be part of it. I was planning on doing some analysis of change in mix from January, but I don’t have the time right now.

    Numbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

  14. 264

    The NWMLS press release even has some warnings about poor agent/buyer/seller practices.

    In commenting on the April data, some Northwest MLS brokers expressed both concern and advice: “Once again, I feel the need and obligation to warn buyers that in most cases it is not a good idea to waive protective legal rights to get an offer accepted,” stated Haines. “The same warning goes to sellers: buyers waiving these rights are potentially severely jeopardizing a seller’s after-closing protections. A recent trend by buyers in making their earnest money nonrefundable at mutual acceptance is not advisable,” she emphasized.

    Northwest MLS chairman John Deely echoed some of the same concerns. He described the Seattle market as “a tale of overconfident sellers meeting desperate buyers.” Sorting out multiple offers to find the best buyer is very complicated, he explained. “The negotiation strategies include both new and proven techniques. Buyers looking to edge out the competition are being asked to, or are, waiving contingencies intended to protect both parties,” stated Deely, the principal managing broker at Coldwell Banker Bain in Seattle.

  15. 265
    Sea says:

    http://www.seattletimes.com/business/real-estate/more-records-fall-median-home-price-hits-722000-in-seattle-and-880000-on-eastside/

    And Scott, for one, thinks this month’s numbers might look a bit worse than they really are. He noticed more homes selling in higher-priced regions and fewer in low-cost areas, skewing the numbers and driving the overall median prices higher.

    “My fears of a newly-developing bubble have not diminished,” said Diedre Haines, principal managing broker in South Snohomish County for Coldwell Banker Bain. “Prices are beginning to increase at unhealthy levels.”

    Seattle’s typical house sold for a record $722,250 in April, less than three years after crossing the $500,000 threshold. Seattle median prices climbed $22,000 just in the past month.

  16. 266
    Sea says:

    By SeaTownDweller @ 262:

    RE: justme @ 260 – Actually Chinese speculators are not getting their asses handed to them in Vancouver, and no data proves that either for Toronto, so can you source the basis of your claim? Chinese deem real estate a safe haven, but they tend to follow (and then become) the real estate trend, rather than pioneering it. So this Seattle market started out with employment boom, then herd mentality brought people in to drives that bubble. But I ask you, so what if there is a bubble and price keeps going up, what’s wrong with riding the wave and collecting profit at some point? Are you saying that within this year the bubble is popping?

    No, but its worth watching how Canada works out…

    http://vancitycondoguide.com/debt-binge-continues-fuel-real-estate-boom-2017/
    http://vancitycondoguide.com/canadas-largest-alternative-lender-gets-smoked/
    http://vancitycondoguide.com/real-estate-bull-says-time-sell/

  17. 267

    [Topic: April NWMLS Stats]

    RE: Sea @ 265

    My initial analysis is that the higher priced parts of Seattle (inc. West Seattle) and East Lake Samammish (Area 540) drove it the increase in median through significantly increased sales increased sales.

    Same disclaimer as above.

  18. 268

    [Topic: April NWMLS Stats]

    6 of the 28 NWMLS areas in King County accounted for over half the increase in sales from January to April. The lowest median in those areas in April was $580,000, but the next lowest was $750,000.

    So clearly a change in mix drove the median up $100,000 in three months.

    Same disclaimer.

  19. 269
    jon says:

    Case-Shiller has not been increasing as fast as the median sale price, so that also indicates a change in the mix. A large factor is probably the big increase in the number of high end apartments coming onto the market. They are probably luring people away from entry level houses. Since the high end houses are not substitutable with apartments, those sales continue. The result is a very high purchase/rent ratio, because that ratio is comparing two different sets of property. The only available source of new close-in, high-end houses to meet that demand is from teardowns, and those do not go through MLS. That is also a factor in the weak sales numbers.

  20. 270
    Brian says:

    Hmm… wonder if we’ll hit 2000 units of inventory tomorrow. Rose a good bit today.

  21. 271

    [Topic: Case-Shiller and Mix]

    By jon @ 269:

    Case-Shiller has not been increasing as fast as the median sale price, so that also indicates a change in the mix.

    Case Shiller lags quite a bit and it will be a while before we have that data for April. But this is not the type of mix change that Case-Shiller should have problems with, because unlike the distressed properties, it’s not a class of property selling for off FMV. It’s geographic.

    Also, Case-Shiller is data for three counties, so the six NWMLS areas will have less of an impact even assuming that type of mix issue affected C-S.

  22. 272
    wreckingbull says:

    RE: Sea @ 266

    “Meanwhile, a report from Better Dwelling highlights the number of Torontonians buying multiple properties is growing at it’s fastest rate on record. A concerned Ross cautions “Many, if not most, properties in a typical Toronto/Vancouver investor’s portfolio have shifted from investment to speculation grade real estate.””

    Pay attention. That folks, is the sickly-sweet, rotten smell of a bubble.

  23. 273
    Erik says:

    RE: Sea @ 259
    1.14^7 = 2.50, that’s a 250% increase. That’s a lot more than double.

    If prices go up a little over 10% a year for 7 years it would double. If credit expands like it is suppose to, I think prices will double in Seattle in 7 years. I wouldn’t bet the farm on it, but I will bet my retirement funds on it.

  24. 274

    RE: Erik @ 273 – I’m impressed! Erik seemingly knows the Rule of 72.

  25. 275
    SeaTownDweller says:

    RE: Erik @ 273 – I don’t think price will double in 7 years, if anything the next 5 years wouldn’t come close to the gain of the past 5 years, and Case Schiller price index did not double from 2012 low to now. I would also conjecture that with ZIRP and QE, the business cycle is distorted such that credit expansion has already been ongoing or baked in. The case for more headwinds is at this point stronger, but I don’t think you would do anything differently even if the annualized gain were just 5%, it may just work out ahead of the index fund with leveraging of mortgage.

  26. 276

    RE: Sea @ 259
    Investors Grabbing Up All the Seattle Real Estate

    Sounds like a Mother Goose tale to me…..or stupid investors trying to get tenants lined up like lemmings jumping off a cliff…paying like $3000/mo so the investor breaks even…it ain’t gonna happen.

  27. 277

    [Topic: The Future and Gains]

    RE: SeaTownDweller @ 275 – I would tend to agree, absent inflation. But note that Erik is leveraged, so even 5% would be doing very well (assuming his current cash flow issues aren’t significant).

    I remember back in 2007 investment rental properties were priced at levels that were nuts, and buyers seemed crazy, and seemingly were proven crazy in 2009, etc. But now, not so much given the increase in rents.

  28. 278
    jon says:

    By softwarengineer @ 276:

    RE: Sea @ 259
    Investors Grabbing Up All the Seattle Real Estate

    Sounds like a Mother Goose tale to me…..or stupid investors trying to get tenants lined up like lemmings jumping off a cliff…paying like $3000/mo so the investor breaks even…it ain’t gonna happen.

    “Today, Amazon is snapping up every building it can find, ”

    from https://www.geekwire.com/2017/amazon-paul-allen-multi-generational-property-owner-changed-seattle-forever/

  29. 279
    SeaTownDweller says:

    RE: Kary L. Krismer @ 277 – I agree with that leverage adjusted gain on capital, hence I said the same in the end of my post. Although vs the index fund, you can also leverage with more liquidity, so it’s more of a would-you-rather kind of scenario.

  30. 280
    Doug says:

    RE: Erik @ 273 – Get rich or die tryin, Erik!

    justme is going to be complaining about a bubble all the way up until Seattle’s median SFH is > $1mm while others count their money.

    I bought my first home in the fall of 2014 and just sold for a 30% gain only 2.5 years later. The trend is your friend.

  31. 281
    Erik says:

    RE: Kary L. Krismer @ 274
    No, I told you I just do math all day. It’s my job right now. Lots of math to get a master of science in mechanical engineering from uw. You gotta be good at the math to get that degree.

  32. 282
    Erik says:

    RE: SeaTownDweller @ 275
    We agree to disagree on this one then. I could be wrong. I often am.

  33. 283
    Erik says:

    RE: Kary L. Krismer @ 277
    The cash flow problem isn’t substantial. I don’t spend a lot of money and I have some savings.

  34. 284
    Erik says:

    RE: Doug @ 280
    Good job. Now buy 2 rentals with minimum down. Meanwhile you can rent whatever you want. I’d hurry before prices get too high. Then you can sell without an emotional attachment. Just keep your eye on inventory and credit expansion.

  35. 285
    Brian says:

    By Erik @ 284:

    RE: Doug @ 280
    Good job. Now buy 2 rentals with minimum down. Meanwhile you can rent whatever you want. I’d hurry before prices get too high. Then you can sell without an emotional attachment. Just keep your eye on inventory and credit expansion.

    Why does he need to hurry if he’s got another 7 years of mega increases?
    I really hope you keep us informed about how this goes for you. It will be entertaining.

  36. 286
    Erik says:

    RE: Brian @ 285
    I’m interested to see what happens too. Hurry because it takes a lot of money to buy and sell real estate. I would suggest buying asap and plan on selling when inventory goes way up and credit expands. I think it will be 7 years, but it could happen sooner. We need to watch the market and be ready to sell.

    If we aren’t in a bubble now, it’s gonna happen. When it does happen prices will increase faster and faster until the market explodes.

  37. 287
    justme says:

    Canada RE market at the margin has been running on stealth subprime loans from Home Capital Group, and probably others. HCG is now sinking fast. HCG was described as “the lender of last resort” by some mortgage brokers, meaning that they had high rates but low standards.

    There is newer just one cockroach. Expect many more cockroaches soon to be seen scurrying across the floor.

    https://www.bloomberg.com/news/articles/2017-05-04/brokers-loosen-ties-with-home-capital-as-it-fights-for-its-life

  38. 288
    justme says:

    Toronto sales/listings (volume) ratio just dropped abruptly from a high of about 83% to about 52%, or about the 2014 level. The graphs in the article are well sourced and highly informative. Recommended viewing.

    http://www.zerohedge.com/news/2017-05-04/toronto-housing-market-about-collapse-measure

    That should be the end of the Toronto bubble.

  39. 289
    justme says:

    Meanwhile in Asia, the Finance Minister of China abruptly leaves economic summit in Japan to attend emergency meeting at home. Yeah, this is all going to end well. NOT.

    http://www.reuters.com/article/us-adb-asia-trilateral-idUSKBN1802V2

  40. 290
    redmondjp says:

    By Erik @ 284:

    RE: Doug @ 280
    Good job. Now buy 2 rentals with minimum down. Meanwhile you can rent whatever you want. I’d hurry before prices get too high. Then you can sell without an emotional attachment. Just keep your eye on inventory and credit expansion.

    Are you pretending to live in your rentals when you finance them, Erik?

  41. 291
    Blurtman says:

    RE: justme @ 289 – He realized that he had left the water on in the tub. it happens.

  42. 292

    RE: redmondjp @ 290 – Erik is buying at foreclosure. Not your ordinary financing.

  43. 293
    Erik says:

    RE: redmondjp @ 290
    No, that is mortgage fraud. I buy them at the auction. I leave myself with the option to occupy them in case I don’t get a high enough appraisal. Investors get 75% LTV. Owner occupied is 80% LTV. If everything goes bad, I could do 95% LTV if I occupied the property and paid mortgage insurance. I may skirt the rules at times, but I do not break them. Buying owner occupied on a rental is clearly mortgage fraud, so I don’t touch that. I think the penalty is pretty steep. I don’t recommend anyone does that. Don’t make life stressful if you don’t have to.

    Something I have done is live there a few years and rent it out later. That’s totally legit. So if you want to “skirt” the system, live in the house a year and then rent it out after that.

  44. 294
    Erik says:

    RE: Kary L. Krismer @ 292
    I just use hard money at the auction. After that you can refinance and have the option to refi as owner occupied or investment property. As I stated above, I only do owner occupied if I move into the property. Claiming owner occupied and then renting is mortgage fraud.

  45. 295
    justme says:

    RE: Erik @ 294

    Can you tell us about so-called hard money lenders? Where do you get the loan, what is the rate, anything else of interest?

  46. 296
    Doug says:

    RE: Erik @ 284 – Naw, I’m out of the real estate game as an investment. I simply got lucky with the timing of my first home and never purchased it with the intent to return 30% in such a short amount of time.

    I now own my long term home and don’t really think of it as anything more than a place to live. I’ve never really understood real estate as an investment. I’ll stick to equities which are liquid, can return far more in much shorter time periods, and don’t include the egregious transaction fees of real estate.

  47. 297

    [Topic: Hard money lenders/buying at foreclosure]

    RE: justme @ 295 – This is one such local lender. http://www.eastsidefunding.com/

    I don’t know what they charge, but there may be a benefit to using them in that they may know what to do to make sure they’re actually getting a valid interest out of a foreclosure sale. But then again they may not know–I’ve never used their services. Back in my bankruptcy attorney days I ran into a factor who didn’t have a clue about how IRS liens worked. And early in my RE agent days I did attend a group meeting of an entity that was “helping” people buy foreclosure properties. They clearly didn’t have a clue.

    I did come across a property several years ago where that type of entity had foreclosed and then sold the property as an REO. The original buyer got in over their heads because the house needed much more work than they anticipated. The lender entity foreclosed and then finished the remodel in a rather haphazard sort of way. For example, a vent pipe from the sewer line didn’t line up with the vent pipe in the roof and the solution was to cut the bottom off a two litter bottle of pop and cover the exterior pipe! ;-)

  48. 298
    justme says:

    RE: Kary L. Krismer @ 297

    To what extent is it true that hard money lenders are just foreclosure mills that engage in speculative high-rate lending with a low (say 70%) LTV ratio, with the intent either to earn outsized interest OR to foreclose and profit from a low effective purchase price?

  49. 299

    RE: justme @ 298 – Probably depends on the lender. There are some predatory lenders out there.

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