Are we really in a bubble?

[MrRational]

First off, let me just say that I've really enjoyed reading this blog over the past couple of months and commend The Tim and others who have spent so much time putting together such extensive data behind our housing market.

I've been thinking about the run-up in prices that we've had over the past few years and it got me thinking about how it compares to historical price swings. For example, in the Seattle market have we ever seen appreciation greater than we have in the past few years?

I recently came across some data from the OFHEO (Office of Federal Housing Enterprise Oversight). In particular, I took a look at historical data for their Home Price Index for the Seattle area. This is how they define their HPI:

"The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. This information is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975. "

In other words, it sounds an awful like the Case/Shiller index except that it accounts for refinancing while C/S does not. OFHEO also has YoY data going back to 1976 while C/S appears to only go back to 1991 in respect to the Seattle market.

So, what does this data show? I was surprised to see that in the late 1970's and late 1980's we saw appreciation significantly greater than we have in our latest run-up...according to the OFHEO data. You may be wondering: how does it compare with C/S? Below I've graphed both sets of data against each other and you can see that they seem to be fairly consistent (not as pretty as The Tim's graphs but I think you'll get the idea ):



By looking at this data it doesn't appear to me that we've experienced anything in the last few years that we haven't seen before. Maybe I'm missing something here so if anyone would like to point out why I'm reading this wrong I would love to hear it.

PS - You can find the OFHEO data for Seattle here: http://www.ofheo.gov/hpi_city.aspx

[Ubersalad]

This is some of the same information that were provided last year. However, there wasn't subprime and alt-a with stated income and 0 down. Price gone up, but it was backed by enough security to sustain it. Also you can almost argue that price has never fallen (don't quote me on that), because in places that did fall such as oil states, huge layoff were taking places and attributing to the depreciation.

I believe we're in uncharted territory, and I don't think I have much to gain from a down shift in economy.

[MrRational]

[deejayoh]

[Ubersalad]

[MrRational]

[anforowicz]

[MrRational]