Case-Shiller: Prices Down 7% from Last Year

According to the latest data from the Case-Shiller Home Price Index, the home price bust in Seattle is gaining steam again.

Down 0.2% May to June.
Down 7.1% YOY.

Last year prices rose 0.65% from May to June, and year-over-year prices were up 7.9%.

Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. With a drop of “just” 5.8%, Portland’s year-over-year numbers have been out-performing Seattle for seven months now.

Case-Shiller HPI: West Coast
Click to enlarge

This graph is not intended to be predictive. It’s just an interesting exercise to see how closely the Pacific Northwest is tracking the ground already covered by Southern California.

Here’s the graph of all twenty Case-Shiller-tracked cities:

Case-Shiller HPI: All Cities
Click to enlarge

Six of twenty cities experienced smaller year-over-year drops than Seattle in June. Charlotte at -1.0%, Dallas at -3.3%, Denver at -4.7%, Boston at -5.2%, Portland at -5.8%, and New York at -6.9%. The largest year-over-year drop was in Miami, where prices plummeted over 28% from June 2007. Ouch.

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities 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
Click to enlarge

Eleven months off our peak, the drop in Seattle has improved slightly, and is now only worse than ten of the twelve “bubble cities” were at this same amount of time from their respective peaks. Only Miami and Tampa had dropped more than Seattle’s 7.3%.

Here’s the “rewind” chart. The horizontal range is selected to go back just far enough to find the last time that Seattle’s HPI was as low as it is now. This gives us a clean visual of just how far back prices have retreated in terms of months.

Case-Shiller HPI: Seattle Price Reversion
Click to enlarge

Well, we can definitely say that March wasn’t the bottom. The index for Seattle dropped to a new post-peak low in June at 178.28, just a hair below March’s value of 178.29. Prices have been holding somewhat steady at June 2006 levels for four months now. Will the summer and fall bring a continued drop, or is early summer 2006 as far as Seattle will “rewind”?

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 08.26.2008)

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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.

61 comments:

  1. 1
    JP says:

    According to the latest data from the Case-Shiller Home Price Index, the home price bust in Seattle is gaining steam again.

    Down 0.2% May to June.

    Down 0.2% is evidence that the “bust is gaining steam”?

  2. 2
    The Tim says:

    When two months ago the index was up 0.7% month to month, I’d say yes.

  3. 3
    JP says:

    Since one month ago, it was -0.5% month to month, couldn’t we conclude that the bust is losing steam?

    Our timeseries is 0.7, -0.5, -0.2. If the bust was gaining steam, I’d expect the delta of the month-to-month change to be negative and getting larger.

    Maybe Seattle prices have a long way to fall, but pointing to this latest Case-Schiller data as evidence of that isn’t very convincing.

  4. 4
    The Tim says:

    You’re free to interpret the data in whatever way you want. I see the return of month-to-month price drops for two months in a row as the decline “gaining steam again” after the month of +0.7%.

  5. 5
    rose-colored-coolaid says:

    Just Nit-Picking here, but Seattle/Vegas/LA all are shades of red and are all pretty close on the chart right now. On my lousy monitor they appear to be nearly identical, but I think that’s just me. Anyways, changing the colors a little might make it more clear what’s going on. Maybe even just making Seattle colored black so it really stands out.

  6. 6
    patient says:

    June’s number is as I expected. We still have April’s relatively strong number from the record low interest rates in the 3 month rolling average. I predict we will see a 9-10% YoY decline when July’s index is out in the end of Sep and then keep double digit territory for the rest of the year.

  7. 7
    Niuska says:

    The first graph showing LA and San Diego offset by 17 months is interesting. It is showing that they had a more extreme bubble at their peak. While the Seattle/Portland is a bit more moderated.

    I have until recently viewed myself as mostly a pessimist and expecting huge declines going forward. Looking at the graph, I now think we won’t see those 25% YOY declines here.

    As an investor looking for deals, my math tells me that we need another 15% decline before it starts to make sense to invest in some of these properties.

  8. 8
    matthew says:

    April’s number is beginning to look more like a fluke. The spring and summer is usually a very strong period of time for the housing market, it will be interesting to see what happens as we start to move toward the fall.

    Keep in mind that unemployment is starting to ramp up in Washington State going into the fall. My guess is that home buyers are going to be staying pat this fall and waiting on the sidelines. My guess is that we see foreclosures continue to increase in record amounts, buyers staying on the sidelines, coupled with growing unemployment in the area, all leading toward double digit declines in YOY housing prices come September according to Case/Shiller.

  9. 9
    patient says:

    Niuska, I also think 25% YoY c/s drops are unlikely but I do think we will see a 30-40% drop from peak. An historic price bubble coupled with a bank crisis and recession is powerful stuff, I wouldn’t be surprised if we see 50% off peak.

  10. 10
    Niuska says:

    patient, you may be correct. But that would argue for a longer decline over two or three years from now. But historically, real estate recessions are like that.

    A simple economic recession is measured in quarters.

    A real estate recession can be measured over years if you look back as past instances on a regional basis.

    We are really in uncharted territory with this happening on a national (and even international) level.

    As an investor, with current rent levels, some of these properties are cash flow positive (or neutral) with a 20% decline from this point. That in itself will bring buyers off of the sidelines. But that scenario requires rental rates to stay at current levels. If rental rates were to decline, that would obviously drag the investor entry point lower also.

    As always, just my opinion.

  11. 11
    patient says:

    It’s interresting to see the slow decline that appears to have happened for most markets around where Seattle are now and then it accelerates rapidly downward again after something like 6-9 months. It could be timing of tightening of lending at that point of time but another possible cause could be what many have stated here, the mortgage threshold. I.e that prices for the bulk of homes for sale are close to the size of the mortgage at 5-8% off peak value. This will slow things down until the short sales and foreclosures materializes and start showing in the numbers as a result of not being able to sell above mortgage size.

  12. 12
    Groundhogday says:

    It is important to keep seasonality in mind. Prices normally rise in the spring and fall in autumn/winter. On the way up, prices flattened during the fall/winter of ’06 rather than fall as they normally would. Now on the way down, prices are flat or slightly down at a time of year when they normally rise.

    These seasonal effects are easy to see in the “decline from peak” graph since markets peaked at different times of year the waves are offset accordingly.

    Bottom line: prices have declined slightly when in a normal year they would have increased. When we start getting data from Aug, Sept, Oct, Nov, etc… the price declines will accelerate.

  13. 13
    patient says:

    Groundhogday, I think that cold explain the slight slowing of decline that happened for the last few months for most market but I don;t think it can explain the 6-12m slow decline between 5-10% off peak for most markets. I think that is something else.

  14. 14
    Interloper says:

    As a buyer on the sidelines I wish our decline was steeper, to make my decisions easier — a rate of 2-3% annual decline is not going to correct an over-valued market anytime soon. But it would suck to buy and then have another steep downward plunge.

    Even the national index has slowed its rate of decline. It seems Niuska may be right and we will see a longer correction, locally and nationally.

    I find it interesting that Portland resumed its decline, like Seattle declining roughly 1/2 of an index point in June. I say this because Portand and Seattle’s indexes are so predictive of one another. Both markets have flattened somewhat but show a slight downward trend.

  15. 15
    david losh says:

    I spoke with a seller yesterday from Virginia who came out to see for himself what the market was doing in Seattle. His little house is a good purchase if he does in fact sell now to take the money back to Virginia. He is very realistic about price and moving his dollars.
    What he and I agreed about is that pricing in Seattle is still good compared to other parts of the country, but Seattle is behind the curve in terms of large scale development.
    Look at the number of cranes building projects around the down town core, and the same is happening in Bellevue. Large scale apartment or condo projects can drive prices down for rentals and housing units.
    There are also hundreds, if not thousands, of housing projects outside of Seattle that are developed and sitting there waiting to be built.
    He and I agree that while Florida, or California were building high rises during the price run ups, Washington was still building housing tracts.
    I just think while agents are saying you never know or that the market is correcting, that the Real Estate market has corrected and we are now seeing more evidence, or confirmation of the decline.

  16. 16
    Thomas B. says:

    “The largest year-over-year drop was in Miami, where prices plummeted over 28% from June 2007. Ouch.”

    It only makes sense that Miami is getting beat up. The Median Household Income is $37,000. That’s household not per capita income! No one that lives in the Miami area can afford anything but a trailer home on swampland. The speculators were out in force and now Miami is paying for it. I would expect Miami to get beat up for the next few years until median income increases or housing prices come back down to realistic levels. You can’t pay for mortgages when your job can’t support the payments.

  17. 17
    being patient says:

    predict we will see a 9-10% YoY decline when July’s index is out in the end of Sep and then keep double digit territory for the rest of the year.

    I agree that July’s index will probably be down 9%-10%, wasn’t June’s number around 9%?

    Anyhow to see the double digit declines for the rest of the year I am not sure if we will see that.

    When you look at Tim’s charts the big drop appeared September of 2007 and the prices seem to fall down hill rather quickly. When the numbers are compared from 2008 to 2007 I am not sure if that type of price decline will continue.

  18. 18
    98115renter says:

    david losh said: “He and I agree that while Florida, or California were building high rises during the price run ups, Washington was still building housing tracts.”

    Just a minor correction, but almost nobody in CA lives in highrises, nor do developers build them. All of the housing boom and bust in CA involves SFHs.

  19. 19
    The MD says:

    Its going to get a lot worse. Seriously, do people here really believe this is about to get any better anytime soon? READ THE REPORTS from CREDIBLE sources!

    http://www.thestreet.com/s/cramer-map-to-a-housing-bottom/newsanalysis/investing/10434379.html?puc=_cnnmoney&cm_ven=CNNMONEY&cm_cat=Free&cm_pla=Feed&cm_ite=Feed&puc=cnnmoney&

  20. 20
    singliac says:

    David,

    I’m a little confused. I agree with you that the glut of new condos downtown may drive prices down farther. But then you claim that the “the market has corrected” (past tense?). Where in the world did you get the idea that we’ve already seen the bottom?

  21. 21
    The MD says:

    Thomas B, I agree with you that you can’t pay for mortgages when your income levels cannot support them. The same goes for Seattle. Income levels in Seattle cannot support the 10:1 ratio of average home price to average salary. Historic home prices have been in a range of 2.3-4 to 1. Our home prices in Seattle are simply not sustainable.

  22. 22
    singliac says:

    Cramer is your credible source? Come on, Doc. Cramer is an entertainer, and nothing more.

  23. 23
    Silver9 says:

    Why would any real estate “investor” use these charts for making a decision?

    The relevant data is the cashflow analysis and the comparable rents analysis. We covered that in a very long and detailed post last week.

    I guess this chart would be helpful for a quick flipper trying to find a bottom but for any long-term investment these charts are not as important and looking at the capital you need to invest and the rate of return on that investment.

    Unfortunately those numbers are WAY out of wack for any kind of sustainable investing.

  24. 24
    matthew says:

    The better question, at this stage in the game, why would anyone even be “investing” in real estate at all? There are much better places to be investing at this stage in the game. A volatile stock market is great for making huge profits on both the long and short sides.

    There will be money to be made by investing in real estate, but we are years away from the bottom.

  25. 25
    patient says:

    being patient said:

    “I agree that July’s index will probably be down 9%-10%, wasn’t June’s number around 9%?”

    Nope, June’s number is what was reported today. It’s down 7.1% YoY.

  26. 26
    cheapseats says:

    Front page of the PI ATm “Another record drop for Seattle-area house values”
    http://seattlepi.nwsource.com/local/376513_housing27.html

  27. 27
    being patient says:

    Just a minor correction, but almost nobody in CA lives in highrises, nor do developers build them. All of the housing boom and bust in CA involves SFHs.

    They have been building highrises in Orange County for the last few years. This area has gotten away from the planned developments and older areas and being torn down with highrises going up.

  28. 28
    being patient says:

    It’s just an interesting exercise to see how closely the Pacific Northwest is tracking the ground already covered by Southern California.

    IMO, California was starting to a decline in prices and large amounts of inventory in summer of 2006. Then it really went downhill last summer in 2007 when the credit problems really started to hit.

    According to the charts it looks like Seattle was still increasing in sales price but the number of houses sold was being to slow down sometime in 2007. However it looks like the big drop off happened into the Fall of 2007 when the credit problems hit.

    Then many other major areas in the US were also seeing a downturn at the same time, in regards to the credit issues.

    IMO, Seattle is a slight image of Calfornia. However I think that it is hard to call if Seattle will see the big down turn prices ,25%-35% in one year, as parts of California.

    The RE in California seems to vary greatly by geographic regions. Just as Seattle or Washington seems to vary by geographic region.

  29. 29
    Niuska says:

    A good argument can be made that the 17 month time delay will close between LA / San Diego and the local Seattle / Portland markets.

    The credit markets, specifically the lack of easy credit, is not a regional issue. That has changed nationally and it changed the same everywhere. As that trickles through, all markets are running into the same difficulty in refinancing and higher down payments.

    That would argue for some steeper declines in Seattle / Portland as the 17 month time delay shrinks.

  30. 30
    NoMoreWork says:

    The tightening of lending standards is really going to put downward pressure on the housing numbers soon and probably already is.

    Friend of mine was approved for a $350k loan ~4 months ago, went back again to renew it and keep shopping and the bank has lowered it to $280k now. No change in income, no change in credit rating, and his down payment grew due to savings!!

    How can this not push prices down? WaMu is struggling, Boeing Machinists are threatening a strike… I guess everything is not green in the Emerald City.

  31. 31
    Seeker says:

    Main problem in Seattle – especially on eastside – most of existing home owners are able to keep up with their loans and they are not worrying to sell their houses with reduction as FL or CA prices. Yes prices are dropping but Seattle market is still absolutely in control of sellers. Let’s hope these ARM resets would move the prices a bit down… But I m sure many owners here are capable of re-financing their houses with a reasonable fixed rate with ho hassle.. Also there are still many families renting out these properties and helping sellers in their game..

  32. 32
    aldreth says:

    YOY is all that matters.

  33. 33
    david losh says:

    I’m going to ask again about the debate for a bottom to the Real Estate market. Who is going to tell you? Who’s going to be the oracle to call the bottom? One gentleman said three months of price increases would be the bottom, or proof that the bottom was hit.
    No, in Real Estate it is an individual to individual deal. If a property is worth what some one will pay then the buyer determines the most they will pay and the seller determines the bottom line.
    The point is that there are sellers who realise they want to sell now rather than hold the property. An agent asked me to look at a property in Burien for $320K. The seller owns other properties in Los Angeles. My thinking is the property here will sell for $220K and they are thinking about it.
    Why hold a non performing asset. They can take the dollars to invest for a couple of years by only paying a 15% Capital Gains rate. How long do you think that rate will be around?
    They own the property free and clear. Yes they can rent it for $2000 or $1800 for a near 10% return, but then there is tax, declining market, renter’s wear and tear. After that they are still in a position of taking the return, maintaining the property, dealing with renters, or they can sell at that time.
    The guy from Virginia was in the same boat, same discussion. The hand writing is on the wall. Most sellers didn’t get the spring bounce, some did, so now what? If you want to sell or need to sell it’s the buyer who’s making the offer.

  34. 34
    TheHulk says:

    Seeker @ 31

    especially on eastside – most of existing home owners are able to keep up with their loans and they are not worrying to sell their houses with reduction as FL or CA prices.

    This is yet another variation on the “Seattle\Eastside is so special” stuff that RE agents around here keep spouting. Most eastsiders would be truly shocked to find out what their homes are selling for in *todays* market.
    I wonder why so many of the loans that were taken out in King County were ARM or interest only loans in 2006/2007. Its because people could not afford to buy those 500K houses at the Fixed rate mortgages at that time. Additionally many people I know bought in to yet another Realtor saying “Get a 7 year ARM, These days everyone sells their houses after 7 years, why do you want to pay more towards principal when you could use that money to get new granite countertops? You will just lose money” when what they really meant was “Oh yeah buy this 600K house instead of the 350K townhouse you can really afford with your ginormous 100K salary at MSFT/AMZN/GOOG. My commission is bigger and heck if things really go like this for 7 years, you will be asking *me* to once again sell this place for a million bucks. Sweet!”.
    Note that this is not merely anecdotal. I know 5 different families who purchased a house during those years (various areas and various financial levels) and they ALL took out ARMs using the logic above.
    The whole thing was a ponzi scheme fueled by cheap credit. The fed is gonna raise interest rates in the next meeting. The leaves are already turning and this housing market is gonna fall with the leaves!

  35. 35
    didn't just fall off the turnip truck says:

    The hulk @34
    I will take any wager you offer right now that the fed will not raise rates at the next meeting.

  36. 36
    Niuska says:

    TheHulk wrote:
    The whole thing was a ponzi scheme fueled by cheap credit.

    That is the perfect way to describe it. The new buyers were just cashing out the early buyers. The losers are left holding the bag (a.k.a. overpriced $500,000+ condo/sfh).

  37. 37
    TheHulk says:

    turnip: yeah, maybe the fed is too chicken to raise rates, but mortgage rates are going up for sure.

  38. 38
    TJ_98370 says:

    A KOMO News 4 story with video:
    .
    Another record dip in Seattle housing market

  39. 39
    The MD says:

    Mortgage rates will rise about 0.25% in the next week or two. Fed rate moving up is about 50/50.

  40. 40
    The MD says:

    In summation, though, The Hulk is pretty much “spot on.” This game is just getting started, folks. There will be at LEAST two bad years in front of us before our market truly hits bottom. Don’t you find it funny the people who keep saying “we JUST hit our bottom” are realtors? Don’t listen to them. They’re half responsible for why this market is so out of whack in the first place. If you want the truth and what to expect, listen to your banker. They’re the ones that actually close the deal and supply the liquidity needed to keep the market afloat… or not.

  41. 41
    TJ_98370 says:

    The MD said:
    .
    …..If you want the truth and what to expect, listen to your banker. They’re the ones that actually close the deal and supply the liquidity needed to keep the market afloat… or not…..
    .
    Are you serious MD? The “bankers” and the fantasy secondary mortgage market valuation scheme is what enabled the whole real estate bubble in the first place…
    ..

  42. 42
    Scotsman says:

    Interest rates are starting to move up, and will continue to do so for some time. A one or two point jump will put a real chill on the market in terms of prices and afford ability. It’s telling that the 10 year treasury has dropped a quarter point over the last few months, but mortgage rates have gone up. Whether the FED raises or lowers to chase the market really won’t matter much. The real issue is bank solvency followed by a need for profitable, well secured lending.

    I’ve come to believe that the current administration- executive, treasury, fed, are working hard to keep things together until after the election. Not because they think their actions will swing votes one way or another, but out of pride. Nobody wants to have the ship sink on their watch. They know it’s going to go down, but hope to keep patching the hull until the next shift comes on.

    Finally, one of the homes on my street that has been for sale for some time and was delisted has come back on the market- with a very high powered agent and a 20% price reduction. When/if it sells, it will push the comps for the entire neighborhood down significantly. This home is indicative of the future. After playing around for a year, the sellers are serious, understand the reality of the new market, and are getting ready to take a hit.

  43. 43
    jonness says:

    Wow! Last year prices rose 7.9%, and this year prices dropped 7.1%. You just got to love the symmetry of this correction. :) It’s aesthetically beautiful. My question to the bubble naysayers (whom don’t seem to come around here anymore) is, “what does the trend look like now, and what condition are the economic fundamentals in?”

    Seattle houses are taking an absolute beating. As we journey from summer to fall, I’m starting to see more aggressive pricing as the desperation ramps up. The cold weather is a sign of the dreary nuclear winter coming upon the Seattle RE market. Interestingly, many of the very aggressively priced homes are still sitting there languishing.

    The most hopeless tactic I see out there is to lower the price a little at a time. These sellers simply follow the market downward and never sell their homes. Prices on the homes that sell are cut in one large chunk, and if it doesn’t sell in a few months, they bite off another large chunk. This chunking excites the buyers and helps to feed their impulses. Inevitably it brings out fence sitters who think, I better get that before someone else does.

    And of course, this helps the market downward toward the reality of supply and demand. Cheap easy loans = price spikes; expensive loans that are tough to acquire = price depreciation. The market is going to look a whole lot better in Spring 2009 after the nuclear winter shakes the desire to see Santa Clause out of the sellers’ minds. Prices will be lower, but more certainty will exist.

  44. 44
    Scotsman says:

    Here’s some funny news- mortgage fraud is up significantly in 2008 verses 2007, despite the large drop in volume. Looks like nobody learned anything last time around…

    http://money.cnn.com/2008/08/25/real_estate/soaring_mortgage_fraud/index.htm?postversion=2008082606

  45. 45
    shawn says:

    I for one, am shocked. Who could have seen this coming!? Tim! Why didn’t you warn us?

    Now the argument is “this is just a blip, it won’t continue, prices are about to go up, or maybe flatten now for a while.” Even now the press won’t/can’t just say “dear God folks sell today before it is too late!” They sure had no problem telling us that “if you don’t buy now it will be too late to buy later.”

  46. 46
    WaitingForSanity says:

    I think it would be much better if you had a graph of the Case Shiller HPI (rather than a graph of the YOY change of the Case Shiller HPI).

  47. 47
    What goes up must come down says:

    Isn’t Seattle still special? Harley help set these nay sayers back on the path.

  48. 48

    IF SEATTLE HOME PRICES MIRROR LA AND SAN DIEGO; WE’RE GONNA COLLAPSE FAR WORSE

    So Seattle price collapses lags SD/LA by six months.

    I remember the optimistic RE pink pony bloggers saying about 6 months ago, that although Seattle prices may be mirroring SD/LA horrifying downward data trending, they were just starting to fall. These RE cheer leaders alleged then that SD/LA would level off [had hit bottom] and then Seattle’s would be on the “pink pony” rise again.

    Where’s these RE cheer leader bloggers comments now? Haven’t heard from RAL in a while, LOL. Maybe he sold everything off?

  49. 49
    vboring says:

    can we keep some perspective here?

    +0.7, -0.5, -0.2% are all big declines in prices that represent very ugly market conditions.

    house prices normally follow consumer price inflation. according to the official CPI, this means that any house price appreciation rate below ~3% is negative.

  50. 50
    shawn says:

    vboring, over the last few years housing in Seattle has followed consumer price inflation?

  51. 51
    Dave0 says:

    can we keep some perspective here?

    +0.7, -0.5, -0.2% are all big declines in prices that represent very ugly market conditions.

    house prices normally follow consumer price inflation. according to the official CPI, this means that any house price appreciation rate below ~3% is negative.

    The 0.7, 0.5, etc is month to month, the normal 3% is over the entire year.

  52. 52
    Dave0 says:

    one month of 0.7% increase = 8.73% APY

  53. 53
    Silver9 says:

    Its way too early to talk about a bottom of any kind. Im tired of hearing about it here.

    The macro picture is that our entire country (the federal government and households) is going to have to readjust our income/expenses to a more sustainable rate. That is going to be painful because a) we like to spend like crazy b) we are used to spending with debt.

    Homes are the largest expense for most people. Home prices went up because of the supply of loans and now prices will fall as the supply of loans collapses. Add to that all the other big expenses: war in Iraq, health care, food + transportation, and most of all retirement.

    I think this is new territory for a generation that has been used to the easy life. History is not a good guide for the next 25 years.

  54. 54
    economist says:

    YOY is all that matters.

    Why? What is so special about a year ago?

    The only special times in market cycles are peaks and bottoms.

    I think it would be much better if you had a graph of the Case Shiller HPI (rather than a graph of the YOY change of the Case Shiller HPI).

    That’s what the second two graphs are (final graph starts at peak).

  55. 55
    Mortie says:

    Tell that to these sellers. Close proximity to a strip club, plasma center, liquor store, love zone (or the Crown Hill micro-economy) — an architect who builds one house a year… Are they trying to flip the neighborhood?

    http://www.redfin.com/WA/Seattle/7344-19-Ave-NW-98117/home/165675

  56. 56
    Buceri says:

    “It only makes sense that Miami is getting beat up. The Median Household Income is $37,000. That’s household not per capita income! No one that lives in the Miami area can afford anything but a trailer home on swampland.”

    Miami is a bad example for a ton of reasons. But mainly, because it’s full of rich Venezuelans that ran away from Chavez, rich Colombians, rich Central Americans, Spaniards, Brits, Canadians, and Germans that want a flat under the sunshine. As well as wealthy New Yorkers and North Easterners. Miami money is not made in Miami. The weather in Seattle is as bad as in Northern European countries and at the cocktail party you want to say you own a place in paradise; not in Seattle. Everyone knows Miami.

    True; it was full of speculators and scam artists; and they overbuilt grossly. It was going to collapse. But, unlike in Seattle, household income is not as relevant.

  57. 57
    Thomas B. says:

    Buceri – All those rich people still need plumbers, mechanics, housekeepers, food service people, waiters, janitors, secretaries, laborers and service people of all stripes. Those people outnumber the rich 10 to 1. After all, administrative assistants outnumber VPs in almost any business. If there is a run up in price in a portion of real estate, all real estate in the area goes up. I don’t know if I buy into the idea of household income being not relevant. Additionally, the sub-prime mortgage is the main problem in the housing bust. Sub-prime mortgages are not given to rich people. The people on the bottom are most affected. “On the bottom” being a broad term to include working class and lower middle class.

  58. 58
    Buceri says:

    Thomas B. – I agree; and I am not saying household income is not important; but Miami is the worst example you can use. Florida is a Banana Republic; but it’s one of the most desirable places to own property for foreigners around the world.

    All I am saying is that Seattle needs to be compared with other towns where growth and wealth is related 100% to jobs. Seattle can not be compared with exotic locations; simply because it does not have the outside pressure on its RE that exotic locations have. Who in the world brags about owning a vacation home in Seattle?

  59. 59
    Garth says:

    Buceri,

    Who in the world brags about owning a vacation home in Seattle?

    robbie knievel

  60. 60
    k2000k says:

    @ I think this is new territory for a generation that has been used to the easy life. History is not a good guide for the next 25 years.

    Have some faith Silver9. Remember this isn’t the first time something has happened like this. The Great Depression played out very similiarly in certain areas of the economy, example being the cheap credit that was avaliable at the very onset of the depression. My generation will learn to adapt to the new economic realities; hard work will still get your somewhere recession/depression or no. If anything I think this will make economimists take a good hard look at their smoothing out of the economic cycle curve theory, where, because of goverment intervention and policies, our boom and bust periods have become less drastic. I don’t think there is anyway that this recession will be any milder than our last one; I would go so far as to argue that the FED and goverment administration policies for the last 15 or so years exacerbated the problem.

  61. 61

    […] cities experienced smaller year-over-year drops than Seattle (vs. seven in July and six in June). Dallas at -2.7%, Charlotte at -2.8%, Boston at -4.7%, Denver at -5.1%, New York at -6.5%, […]

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