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Seattle Home Price Appreciation Continues to Deteriorate

The latest (May ’07) Case-Shiller Home Price Index data has been released. Although appreciation is declining right along the path that has been predicted here, you can count on the local media to focus on the “Seattle is special” angle.

Seattle-area home values continued to rise in May, bucking a national trend of declining home prices, according to a Tuesday report.

Prices for existing homes in King, Pierce and Snohomish counties were up 0.9 percent from April and 9.1 percent from May 2006, according to Standard & Poor’s S&P/Case-Shiller Home Price Indices.

That annual increase was the highest of 20 major metropolitan areas that the study tracks, followed by Charlotte, N.C., at 7 percent, Portland at 5.7 percent and Dallas at 1.8 percent.

On average, year-over-year home values in the 20 cities declined by 2.8 percent.

Seattle’s strong economy, and the fact that home prices didn’t shoot up as wildly as in other parts of the country, has insulated it from falling prices, said David Blitzer, chairman of the Index Committee for Standard & Poor’s.

“Seattle and Portland for the last several months have been islands of relative calm and success,” Blitzer said. “But it’s very difficult to say whether Seattle has completely escaped any downturn or whether it’s just been delayed.”

Actually, it’s not difficult to say at all. In fact, I’ve said it before, and I’m going to say it again right now. Seattle’s downturn has merely been delayed.

Here’s an update to the “behind the cycle” chart I presented last month. Looks like we’re right on track…

Do not expect the local media to give more than a passing mention to the “behind the cycle” concept until we get much closer to 0% YOY price change. I’m predicting they may finally start to get a clue early next year.

(Jennifer Langston, Seattle P-I, 07.31.2007)

Update: Check out a great post by P-I blogger Don Smith: Caution about those housing price increases. He does a good job explaining some of the reasons that Seattle’s local economy lags behind much of the nation. Thanks, Don!

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

26 comments:

  1. 1
    Happy Renter says:

    Actually, it’s not difficult to say at all. In fact, I’ve said it before, and I’m going to say it again right now. Seattle’s downturn has merely been delayed.

    Waiting, waiting, waiting! I’m pretty sure it’s going to happen.
    AVARAGE FAMILY CANNOT AFFORD TO BUY A HOUSE IN SEATTLE! P-E-R-I-O-D-!
    People wake up! Do not become mortgage slaves, stop feeding fat realtors.
    I’m renting a house and I’m HAPPY! Debt free!

  2. 2
    softwarengineer says:

    THEY TELL US NOTHING ABOUT UNSOLD INVENTORY IN SEATTLE FOR JULY 2007

    The realitors remind me of politician liars, when they don’t want to tell us their real stand on issues, they tell us nothing. The WSJ documented about a year ago about 1/4th the Seattle homes had price pressure downward, because of the glut of unsold homes in Seattle. No WSJ data for 7/2007, God Forbid the MSM for Seattle keep us peons informed.

    Don’t trust any MSM or government source that omits the local inventory surge, they’re liars.

    On the snapshot side, my friends trying to sell homes in Seattle are lowering their prices and still can get no qualified buyers and its getting horrible the last several months. I suggest Seattle Bubble do snapshots as a gage of unsold inventory lowering Seattle area real estate prices. The MSM omits this news entirely, if you don’t believe me, try a google on “unsold home inventory in Seattle”….all you’ll get is 2006 data…..its obviously rigged!!!

    My other snapshot evidence Seattle home prices are severely collapsing right now are Summer foreclosure data; its unchanged from Spring and should have seasonally gone down if prices were going up 9%.

    Seattle MSM are liars!!!

    Help me fellow bubble bloggers, you guys are great finding some data that Seattle area internet googles obviously hide from us…

  3. 3
    CCG says:

    Heh, again the comments indicate that their readers aren’t quite as stupid as they hope.

    http://seattlepi.nwsource.com/soundoff/comment.asp?articleID=325818

  4. 4
    rose-colored-coolaid says:

    The chart makes it look like we might not hit 0% appreciation until summer 2008. I would have bought that, until the last month when the financial industry began to implode. Now I think we might see 0% appreciation in about 6 months.

  5. 5
    Happy Renter says:

    my friends trying to sell homes in Seattle are lowering their prices and still can get no qualified buyers and its getting horrible the last several months.

    And your friends are not alone. If they cannot sell this summer, most likely they’ll have to wait until next spring or drop the asking price a lot. Good luck!

  6. 6
    Zzyzx says:

    The one thing that really does stick out in that chart is how mild Seattle’s run up was compared to other cities. If you’re looking for a reason to not be worried, notice that every single city had a higher peak and SD and LA had peaks 3 times as long.

    It doesn’t mean that values will keep going up, but until LA starts having 20-30% decreases, it would be hard to project a massive decline for Seattle based on that data.

  7. 7
    Buceri says:

    Ziprealty.com has a search feature that shows only homes where prices have been dropped.
    At this point, they show an inventory of 8995 SFH in King; 3424 with reduced price. Take it for whatever is worth..

  8. 8
    hesotriflin says:

    I’ve been tracking the geography of Western Washington on http://www.local.live.com for the past year and I have discovered they are NOT making any more land, how can prices of homes POSSIBLY be going down????

  9. 9
    pegasus says:

    hesotriflin said,

    “I’ve been tracking the geography of Western Washington on http://www.local.live.com for the past year and I have discovered they are NOT making any more land, how can prices of homes POSSIBLY be going down????”

    Hesosmart….you one smart cookie. You way too smart for us….very sharp….you sell real estate? You got a pink pony in the backyard? They aren’t making anymore of those either but there is a sucker born every minute, eh?

  10. 10
    TJ_98370 says:

    Seattle, Eastern Idaho and BALLARD mentioned in Ben Jones HBB today

    Somewhat of a Fear of Buying at Peak

  11. 11
    TJ_98370 says:

    Direct quote lifted from above referenced HBB article –

    “‘Ballard is just hot – it’s one of the hottest,’ Martin said. ‘It has such a unique feel.’”

  12. 12
    TJ_98370 says:

    Comments to above referenced article are fun to read also.

  13. 13
    hesotrifln says:

    Hesosmart….you one smart cookie. You way too smart for us….very sharp….you sell real estate? You got a pink pony in the backyard? They aren’t making anymore of those either but there is a sucker born every minute, eh?

    Pegasus, this is the internets, i hope you understand sarcasm.

  14. 14
    Happy Renter says:

    I’ve been tracking the geography of Western Washington on http://www.local.live.com for the past year and I have discovered they are NOT making any more land, how can prices of homes POSSIBLY be going down????

    I think they didn’t make any more land in Japan either. :)

  15. 15
  16. 16
    The Tim says:

    hesotrifln said,

    Pegasus, this is the internets, i hope you understand sarcasm.

    hesotrifln, don’t you know that The Internet Is Serious Business?

    The Internet Is Serious Business

  17. 17
    BanteringBear says:

    The only thing keeping the game going in the Seattle area is the speculation from those with good credit, and those who have their own money. But, it’s looking more and more like the jig is up on Alt-A, so that branch of the lending tree will be pruned soon enough. The only question is “when” will Seattle go negative YOY.

  18. 18
    rose-colored-coolaid says:

    BanteringBear, I also would like to know how negative we’ll go, and what month will be the bottom. Thank you very much.

  19. 19
    MisterBubble says:

    Did anyone else notice that 138 SFH “sold” this morning between 6 and 7 AM, and that inventory has been slowly climbing again throughout the day?

    It will be interesting to see the numbers that are used to compile the NWMLS July report — nearly a month’s worth of inventory growth was blipped from the system, and I’ll bet you a pink pony that the final report doesn’t reflect the change….

  20. 20
    MisterBubble says:

    Excuse me: nearly 138 homes were sold between 5 and 6 AM….

    Did Ardell pull a double shift?

  21. 21
    Alan says:

    The Windermere data dropped between 5am and 6am the last two days. There is some sort of automated maintenance program being run. Maybe those are MLS listings that have been on the market so long that they may expiring. They will show back up when the partner systems refresh the listing.

    John L. Scott and the 3rd listing company show similar behavior.

  22. 22
    NoFate says:

    First, what IS up with the friggin MLS? They still have not fixed their price/inventory feed to other websites in at least a month now!

    Second, make sure you follow the Don Smith URL The Tim posted …it’s spot on and the first time I’ve read something about housing in a newspaper that wasn’t skewed.

    Finally, I don’t think prices are gonna drop significantly until we are in a recession. I think a national recession will start in 6 months, so if Don is right …it will be a year after that before we get deep discounts (if you have a job).

  23. 23
    Buceri says:

    I agree NoFate. With high prices and higher interest rates, people stay put (don’t “upgrade to 3000sq.ft.”); only speculators struggle. But job shortages create exodus, excess inventory, desperation and price reductions.
    Our economy is held together by our excessive spending habits. With credit tightening, the party can’t last much longer.

  24. 24
    mike2 says:

    The one thing that really does stick out in that chart is how mild Seattle’s run up was compared to other cities.

    Yes, but most of those other cities didn’t run up like Seattle did during the dot com boom.

    Seattle started the recent run up from a higher starting point, and overall growth was mitigated by a severe local recession.

  25. 25
    GetJobs says:

    wow, can you say confirmation bias?

    once you have looked that up, cry those sweet tears of objective gloom-and-doom discourse that make this blog oh-so entertaining!

  26. 26
    Greg Kirkos says:

    Thanks for posting this graph. It makes me feel a lot better about the market here.

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