Radar Logic: Seattle Going Into the Red

Uh-oh, looks like Seattle is starting to get some negative national attention. As in, coverage that isn’t saying “wow, look what a strong, resilient housing market,” but rather “looks like Seattle’s housing market is poised to fall.”

Seattle, wake up and smell the coffee, your housing prices may be falling faster than foam on a latte.

Seattle, whose job growth from such companies as Boeing Co, Microsoft Corp, Google Inc and Starbucks Corp, is seeing the strength of its housing market eroding, Jonathan Miller, Radar Logic director of research, said on Tuesday at the Reuters Housing Summit.

Seattle has ranked about the top of all the U.S. housing markets over the past few years, Miller said. Prices have appreciated at about 12 percent to 16 percent yearly.

This past summer, the appreciation rate fell to 9 percent. Today its stands at about 1.5 percent. Meanwhile, the inventory of unsold homes in that market climbed at 40 percent over the last year.

“You can really see a top market like Seattle, which has been consistently performing well, going into the red,” said Miller.

It’s nice to hear something about Seattle’s housing market in the national media that isn’t of the “real estate party in Washington” variety. It’s true, things really are slowing down here. Prices have been falling since the summer, and not just in the usual seasonal way.

If you’re interested in checking out Radar Logic’s data, head over to their website, where you can generate nifty graphs of home prices and transaction volumes so you can see for yourself what Mr. Miller is talking about.

(Ilaina Jonas, Reuters, 02.19.2008)

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.


  1. 1
    S-Crow says:

    Never mind that interest rates have quietly (or not so quietly for those in the biz) increased to over six percent for a 30 yr fixed since my last post urging those who have the capacity to refinance, to get busy.

    I think that Steve Tytler, whether intentially or not, has been writing in the Herald about the market changes and that people considering refinancing should move forward with it (at least that is the underlying theme).

  2. 2
    rose-colored-coolaid says:

    S-Crow, do you have any professional opinion where rates are moving? I have nothing but hunches. However, my hunches say rates are heading north of 7% sometime by mid June. I felt like the 5% rates we just saw were anomalous.

  3. 3
    blueskitten says:

    Tha’s really interesting to compare Seattle to the charts for some other cities. The biggest boom cities Miami, Las Vegas seem to have almost no seasonality – a pretty smooth line up and down. By contrast Cleveland and Boston both have very strong seasonality, with annual peaks in late spring; yet the annual peaks and valleys lie pretty close along that same up and down line as the boom cities.

    Seattle’s line seems to be a hybrid of the two extremes; the seasonality was pretty evident until 2004 and then the winter lows didn’t really materialize anymore until this year.

  4. 4
    S-Crow says:


    I argued with my broker at the end of the year (’07) about rates dropping (I said, no way) and he ended up being right, but his tune has changed very recently, so now my broker is probably getting glossy eyed. If rates go to 7%, affordability will probably be increasing while housing price pressure mounts–everywhere. But, until then, I’m going to think about happy things.

    Now that you have me thinking…I’ve found it interesting to track common adjustable rate mortgage index:: LIBOR, 1 yr Treasury, etc.. because ARM’s are tied to these. For example, it is really helping those with resets keep their rates low. On the other hand, I’m reading reports that defaults are occuring prior to these recasting, not necessarily because housing values are dropping; which means that people got in over their heads to begin with.

  5. 5


    The witches brew logic I hear makes no sense though, like they assert the economic stimulus package will cause inflation, because its not really needed, and the economy is on the rebound this year type hogwash….therefore, interest rates up .5% this week with good economy inflation fears.

    see the convoluted proof:


    My guess is the banks aren’t passing the recent fed fund cuts to real estate mortgages [they don’t have to], but they made sure to butcher axe money market savings rates anyway. Its welfare bail out money for the rich banks, courtesy of the Feds….

  6. 6
    David McManus says:

    Wanna hear an imitation of every realtor right now?

    Plugs a finger in each ear.

    At the top of my lungs….


  7. 7
  8. 8
    Sniglet says:

    What rates are you referring to, rose-colored-cool-aid? If definitely think that Federal Reserve rates will keep dropping all the way below 1% in the next couple years. You can pretty much count on more rate cuts this year.

    However, how that might translate into mortgage rates is a dicier issue. I think it is a fair bet we will continue to see mortgage rates rise for any kind of even slightly risky product (Jumbos, Alt-A, no-doc, small down-payment, etc).

    The big unknown is what will happen to the straight-forward 30-year fixed products, with good down-payments, documentation, and credit history. They could stay where they are, rise, or even fall. I suspect we may see quite a bit of volatility in mortgage rates over the next 24 months as the financial markets continue to reach market prices for all the toxic waste in the system. In the LONG run (30 months, say) I believe we will see rates for super-safe 30-year fixed loans lower than they are today. Most of the other mortgage products won’t even exist.

  9. 9
    TJ_98370 says:

    Kitsap Homeowners Feel the Pain of Subprime Loans

    …..Marvelle Lahmeyer, a housing counselor with Kitsap County Consolidated Housing Authority, said she’s never seen it so bad. Dozens visit or call her Silverdale office each week. She expects quadruple that volume this year. The tissue box is hopping…….

  10. 10
    Sniglet says:

    I just love this quote from the Kitsap article, “The majority of it is they just got a bad loan”.

    That’s all it is. It’s not that people were trying to live beyond their means, or seeing their homes as money generating machines. It’s just that they got a “bad” loan product.

  11. 11
    rose-colored-coolaid says:

    Sniglet, I’m talking about mortgage rates.

  12. 12
    matthew says:


    Risk premium is now being factored into all the mortgages being sold, in all flavors. That is why you are starting to see a spread widening between the 10 yr treasury and mortgage rates. Traditionally they move in unison, but right now banks are not willing to buy mortgages in a declining market without a risk premium.

    As the market continues to deteriorate and market conditions get worse, the risk premium will get higher and higher. Despite the Fed cutting rates, mortgages are going to continue to rise as long as being mortgages is risky. The lender wants to be compensated for the additional risk he is taking on his books.

  13. 13
    S-Crow says:

    From the Kitsap article:

    “Local lenders and housing counselors applauded the move, and say educating prospective homeowners is key to never getting in this mess again.”

    Oh, the irony.

  14. 14
    Sniglet says:

    “Education” won’t solve anything. It doesn’t matter how knowledgable people are about finances, when a bubble panic grips them they will throw all caution to the wind to avoid being left out.

    Greed will overcome any amount of eduction. Likewise, fear can cause people to panic beyond what is reasonable too. This is why we will have extremes on the downside too.

  15. 15
    deejayoh says:

    aubrey cohen gave you some props over on his blog


    ever vigilant :)

  16. 16

    Hey Tim – nice post – the key to tracking real estate markets is getting rid of smoothing. Keep up the great work. I’ll link out to my own blog Matrix.

    Blues Kitten – made some great observations. Seasonality definitely is pervasive in transaction counts but the warmer climates show less. Speculative new development was the key driver in the warm weather markets.

  17. 17

    What goes up must come down! What goes up faster must come down faster!!! Now that is really NOT Physics but must be Seattle Housing Prices.

  18. 18
    anon says:

    To the poster above who wonders why Miami and Vegas don’t have the strong seasonality of the northern cities: easy, weather. They don’t have harsh winters and so there isn’t a big natural slowdown like up north.

  19. 19

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.