Seattle Bubble

I have now been tracking the Distressed Sellers Index for a full year, and since I haven’t mentioned it on here since way back in October, I thought it now would be a good time for another update.

Please keep in mind that I do not claim the DSI to be in any way scientific or statistically rigorous, but rather I provide it as a point of general interest. It uses an original and proprietary algorithm to measure the ratio of listings using “distressed language” compared to the total number of listings.

Here’s a graph of one full year of the DSI:

Click to enlarge

Last May the DSI was in the upper 20s. This May it has bounced up to over 100, with the latest update coming in at 103. You can also see above that February and March had a series of particularly high points on the index, and it appeared to be heading back down to the upper 70s until the last few updates.

Again: I’m not attempting to apply any sort of predictive meaning to these values. They’re provided as a curiosity, nothing more.

For the sake of comparison, here are the current DSI values for select additional cities:

• Boston: 77
• Detroit: 96
• Las Vegas: 222
• Sacramento: 150
• Miami: 212
• San Diego: 209
• Los Angeles: 168
• Phoenix: 162

Most of the other cities fall more or less in line with where you would expect based on the condition of their respective housing markets, with the notable exceptions of Boston and Detroit (down 12% and 23% from their respective peaks). My guess as to what’s going on there would be that most sellers in those cities have managed to make it all the way through the five stages of grief and since they’re now accepting the falling prices situation, they don’t tend to use distressed language in their listings.

Anyway, there you go. If this index is interesting to enough people, I can make it into a regular monthly post. Otherwise it will remain just an occasional curiosity.

It’s been about a month since I introduced the Distressed Sellers Index, so I thought it would be a good time to check in with another update.

Here’s the latest graph:

Click to enlarge

As you can see, since our last update the DSI has jumped nearly 20 points up into the 70-80 range, where it has been holding somewhat steady. The latest reading came in at 77.

Again, I’d like to remind you that the DSI is non-scientific, and is provided merely as a curiosity. A value of 77 has no particular “meaning” other than the general theory that higher index values means more distressed sellers in the Seattle area. I’m not attempting to make any claims regarding predictive or even descriptive qualities of this index. We’ll need more than a few months’ worth of data before we can begin to form any such hypotheses.

Continuing with the excellent suggestion from the previous DSI post, here is the current DSI for select additional cities as of today:

• Boston: 83
• Las Vegas: 148
• Sacramento: 153
• Miami: 137
• San Diego: 206
• Los Angeles: 138
• Phoenix: 201

I’d like to introduce a new statistic to Seattle Bubble: the Distressed Sellers Index (DSI). This is a metric I have been recording since May, and while I don’t have enough data to do year-over-year comparisons yet, given the recent action, I thought it was a good time to bring it in.

The DSI uses an original proprietary algorithm to measure the ratio of listings using distressed language compared to the total number of listings in the Seattle area. It is most definitely not scientific by any means, but rather is provided as a point of general interest.

When I started taking data in May, the DSI sat in the upper 20s. In mid-July, it broke through the 50 mark, and the most recent measure places it at 61. What does a value of 60 mean? Who knows! What is interesting when looking at the DSI is the trend. Increasing values mean a market in greater distress, and vice versa. I would also point out that the seasonal effect that you generally see in most housing market measures is automatically accounted for in the DSI since it is derived from a ratio of total homes for sale.

Here is a graph of the DSI action since I began taking measurements:

Click to enlarge

I’ll probably pop in with an update to the DSI every month or two. It will be interesting to see how this correlates with other available measures and indices out there.

Update: An excellent idea was posted in the comments by reader “on topic”, who asked: “could you track the same index for markets in other stages of their bubbles?” Here is the current DSI for select additional cities as of today:

• Boston: 86
• Las Vegas: 111
• Sacramento: 121
• Miami: 136
• San Diego: 168
• Phoenix: 170