Case-Shiller: Price Drops in Seattle Re-Accelerating

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

Down 1.0% June to July.
Down 8.2% YOY.

Last year prices rose 0.20% from June to July, and year-over-year prices were up 6.9%.

Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. Portland continues to experience a smaller “correction” than Seattle, falling 6.6% YOY in July.

Case-Shiller HPI: West Coast
Click to enlarge

This graph is not intended to be predictive. It is for entertainment purposes only.

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

Case-Shiller HPI: All Cities
Click to enlarge

In July, seven of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops than Seattle. Charlotte at -1.8%, Dallas at -2.5%, Denver at -4.7%, Boston at -5.4%, Portland at -6.7%, New York at -6.9%, and Cleveland at -8.1. The largest year-over-year drop was in Las Vegas, where prices plummeted just under 30% from July 2007.

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

It has now been exactly one year since Seattle’s Case-Shiller index peaked, and prices have declined a total of just over 8%. One year after peaking, only two other cities had declined more than Seattle has: Tampa & Miami, at 8.8% and 17.5%, respectively.

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

Seattle’s Case-Shiller value for July 2008 was halfway between its May and June 2006 values. So far we are “rewound” twenty-five and a half months. The June to July drop puts Seattle at yet another new post-peak low, nearly two points lower than June.

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

(Home Price Indices, Standard & Poor’s, 09.30.2008)

0.00 avg. rating (0% score) - 0 votes

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.

55 comments:

  1. 1
    matthew says:

    Only two cities suffered worse M2M declines: DC and Miami. Seattle really is becoming special…. In a negative way.

  2. 2
    patient says:

    I find myself starting to hope for a bottoming out of the hardest hit areas just to remove some fear leverage from the corrupt liers in Washingtion.

  3. 3
    vboring says:

    the good news is that i’m starting to see places in the city that i could actually afford to pay the mortgage on while counting only my income (excluding the wife’s).

    and not all of them are complete heaps of “golly”

  4. 4
    Mike2 says:

    Don’t you wish you’d bought in 2005 instead of starting this silly bubble site?

  5. 5
    matthew says:

    we are already at 2006 price levels and headed on a fast descent to 2005.

  6. 6
    Alan says:

    Don’t you wish you’d bought in 2005 instead of starting this silly bubble site?

    While that question isn’t directed at me, I’m going to answer it anyway.

    I owned a condo in 2005.

    In Texas.

    I did not know I was going to move here a year later. Shame on me for not having that foresight.

  7. 7
    patient says:

    Mike2, I guess the question is aimed at The Tim but I’ll give my answer which would be a big NO. Prices will most likely revert to at least 2005 levels as early as 2009. At that time there will likely be a much larger inventory to choose from, less competition and stupid bidding wars, no buyer concessions etc. I will also be in a financially better situation with 4 years worth of extra savings and a 2005 price will be much more affdordable when taking 4 years of inflation into the equation. So no, definately no.

  8. 8
    Thomas B. says:

    I believe, even in 2005, housing was overpriced. I wanted to buy in 2005, but the cost of a house just didn’t make sense to me. I opted to rent instead to await the bubble to burst. Well, good thing I did since the bubble did pop in a big way. I think the market will over-correct to 2004 levels, as the market always does. I wouldn’t be surprised if it corrected to 2003 levels.

    Of note is what appears to be a flattening in the decline from peak value in Boston and New York, both unique markets, but I fear that trend may be shortlived since the financial sector is undergoing a reorganization. Not many new finance jobs being created, and a lot of excess employees floating around.

  9. 9

    INTEREST RATES GOING UP

    Assuming all this hype about a potential housing bailout is just that, “hype”, with no one with the guts to buy the US treasury bills [China refuses to], so taxpayers can pay interest on them anyway, the banks are doing the prudent thing when their companies are losing money; they’re raising interest rates.

    Here’s proof from the news today, as stated in part:

    “….The benchmark London Interbank Offered Rate, or LIBOR, that banks charge to lend to one another rose sharply Tuesday, making it more expensive and difficult for consumers and businesses to borrow money. In addition, credit card debt and more than half of adjustable-rate mortgages are tied to LIBOR, so an increase isn’t welcome for many consumers.

    LIBOR for 3-month dollar loans rose to 4.05 percent from 3.88 percent on Monday. LIBOR for 3-month euro loans, meanwhile, rose to 5.27 percent, from 5.22 percent Monday….”

    the rest of the URL:

    http://biz.yahoo.com/ap/080930/wall_street.html

    I predict, with this will come a Seattle home price collapse worse than we’ve ever seen, as up until lately, low mortgage interest rates have been the sacrificial cow to worship….now its crunch time….the banks have no choice.

    If you buy a home soon, make sure one income can afford it easily. and that’s assuming if the bank will lend you the money, that’s a “BIG IF”, even with 25+% down now-a-days.

  10. 10
    Thomas B. says:

    P.S. I like the new edit feature, but I wish it gave us more time to edit.

  11. 11
    wakeup says:

    I thought the consensus here is that Seattle RE will crash at least 50%, and not a surprise if it crashes 80%. I remember somebody in this forum proved it.

  12. 12
    Interloper says:

    Thanks for the updated numbers.

    This bubble-deflation is proceeding in pretty predictable ways (when separated from the political mess in Washington).

    Although these numbers only go through July, it appears August will be bad based on the NWMLS numbers, and September will be bad because of the credit freeze. So, the curve isn’t turning up anytime soon.

    Now it’s a matter of how far this will unwind for Seattle. We would need a year of additional 10%+ YOY declines just to reverse the 2003-2006 bubble. Guess I have to keep renting.

  13. 13
    Bits_of_Real_Panther says:

    “I thought the consensus here is that Seattle RE will crash at least 50%”

    If that happens you’ll want to be long ammo and soup

  14. 14
    deejayoh says:

    10 wakeup // Sep 30, 2008 at 12:04 pm

    I thought the consensus here is that Seattle RE will crash at least 50%, and not a surprise if it crashes 80%. I remember somebody in this forum proved it.

    Now you are just being a troll. Tim did a poll on this very topic and consensus was 20-30%. Very view respondents selected over 40%.

    https://seattlebubble.com/blog/2008/06/15/poll-how-far-will-seattles-case-shiller-hpi-fall-from-the-july-07-peak/

  15. 15
    alex says:

    patient@7: I share your opinion, BUT I do get shaky when I realize that my friends who bought earlier on have lived several years in their dream house, while I’m still chasing mine.

    Just think about it: 4 years, 5 years, even 2 years … that’s a lot considering our short lifespan! Even if they lose their house to foreclosure, no one can take away from them the enjoyment they already had over these years.

  16. 16
    wakeup says:

    >Tim did a poll on this very topic and consensus was 20-30%

    20% down brings the index to 153 and 30% down brings the index to 135. When seattlebubble started, the index was 156.

  17. 17
    Mike2 says:

    Alan, Patient, Tom – If I remember correctly, that quote was from a Realtor chastizing Tim. (or was it 2004?) Whatever the case, we’re getting back there quick.

  18. 18
    Buceri says:

    Is there any way to add the drop from peak to the stats? Is it there and I am missing it?

  19. 19
    Mike2 says:

    Maybe it was 2005. The oldest cached copy of the site I can find is from October 2005.

    http://web.archive.org/web/20051029234456/http://seattlebubble.blogspot.com/

    When did this all start anyway?

  20. 20
    wakeup says:

    > When did this all start anyway?

    Seattlebubble started in August 2005. Most of the fans of this forum at that time really bought into the bubble in 2007, after waiting for almost two years, they lost patience.

  21. 21
    waitingforseattletocool says:

    The Tim,

    Do you have any data on months of supply for some of the other markets?

    I think you would see, at least in the case of the San Diego market, the months of supply reached in excess of 12 months preceeding the steepest fall.

  22. 22
    patient says:

    alex, if you feel like renting is robbing you of decent living you should look around for another rental. I’ve rented SFHs similar to what I will buy when the time is right since before 2005. The sacrifices compared to owning are really pretty minor to me, especially when I hear my friends moaning about the costs of replacing this and that. When adding the bubble to the mix renting beats owning by miles for me counted from 2005. Time passes quickly and what you remember and tresure is not the house you lived in and the purchases you made, it is the experiences you had.

  23. 23
    TJ_98370 says:

    Dow is up 500 today. The crisis is over! Time to invest in WaMu stock and over-priced real estate.

  24. 24
    matthew says:

    Chalk me up to one who believes will we revert to 2002-2003 price levels. I’ll go on record with that prediction.

  25. 25
    Thomas B. says:

    I second matthew… the market will overshoot and end up at 2002-2003 levels.

  26. 26
    Scotsman says:

    Ah, yes, the dreaded accelerating downward spiral. Still looking good!

    Put me down for 40% off peak. Extenuating circumstances will have their impact.

  27. 27
    Thomas B. says:

    Interesting piece from MarketWatch:

    Economists expect further price declines, especially if financial markets continue to be unsettled and credit remains tight. The declines in home prices should bottom late next year or in 2010, said Adam York, an economist for Wachovia Securities.

    The bottom isn’t for another year or two!!! Wow. If the hypothetical is true that Seattle lags behind other markets, then Seattle’s bottom isn’t until 2011.

    Link

  28. 28
    Bits_of_Real_Panther says:

    That would be a 40% correction from peak. We’re not even at 10% now.

    I’ll take the midpoint, 25% correction on the Index, back to spring 2005, and it will happen in about 18 months.

  29. 29
    Ray Pepper says:

    40% to 50% off peak……..Is that the Bubblites new predictions??………….Good Lord.!!…………..No T shirts and Hot Dogs for anyone at the October Home Shows…………. Well, I’ll still serve the Dogs just no buns. You provide your own condiments!

  30. 30
    Yesler Hill says:

    “Extenuating circumstances will have their impact.”

    Woohoo! Indeed.

    I’m not convinced all the money being poured into the global financial system will keep the US/Neo-liberal classical economics afloat. These sorts of “bailouts” (giveaways) haven’t been so useful in the past. Maybe if we were France or Norway, etc, where they didn’t buy into the privatization gimmick, we’d come out safely. But he US, and the UK, are going to do some long term suffering for the Reganomic/Thatchernomic grifts that have been spun out here for the last 30 or so years.

    I’m a life long renter, and disabled on a fixed income, so I’m hoping for 1987 prices/rents!

    Now, if only Seattle had gone with rent stabilization in the 1980s, landlords would be in a much safer position at this point.

  31. 31
    rose-colored-coolaid says:

    Interesting piece from MarketWatch:

    Economists expect further price declines, especially if financial markets continue to be unsettled and credit remains tight. The declines in home prices should bottom late next year or in 2010, said Adam York, an economist for Wachovia Securities.

    The bottom isn’t for another year or two!!! Wow. If the hypothetical is true that Seattle lags behind other markets, then Seattle’s bottom isn’t until 2011.

    Would that the be an economist for the same Wachovia that recently sold for pennies on the dollar to avoid bankruptcy?

  32. 32
    Thomas B. says:

    40% to 50% off peak……..Is that the Bubblites new predictions??

    It’s amazing people are still in denial about the bubble. The fact is that houses were overpriced in 2005. It is likely that we will drop below those levels.

  33. 33
    Civil Servant says:

    Yeah, so about those extenuating circumstances and the Seattle market’s time lag. Can someone with a firmer footing in economics than I have say what the effect of the recent financial implosion might be for us — i.e., should we expect rates of decline past what other markets have seen at peak + 1 year, should we expect to catch up to other markets in terms of total decline from peak after some amount of time, should we expect that the eventual bottom will be a little lower all around…? I get that this mess is a game changer but am not sure by how much. And is it a field leveler as well? Or is it truly impossible to predict?

    I used to think a 20% decline from peak was a crazy optimistic guess. (Optimistic from the would-be buyers’ perspective, I mean.) I thought this as recently as a few months ago, so I’m officially retired as a prognosticator. I am out of my league.

    Deejayoh @ 13, thanks. That “consensus” bait gets annoying. It’s a blog, not the Borg.

  34. 34
    Howie says:

    The decline should become more rapid now that we are losing Wamu and the credit market has frozen. With loans getting more difficult to obtain, a lot of potential buyers are no longer in the game. Get ready to watch the vertical leap off the cliff soon.

  35. 35
    Jillayne says:

    It’s going to take a long time to unwind this mess. I’m on record as saying 8 years and we’re almost done with year two. I say we have six more years to go. Alt-A ARMs won’t start to reset until 2009 and into 2010.

    We have LOTS of foreclosures to work through the system. Foreclosure rates continue to climb.

    Higher foreclosures have a downward effect on home values.

    Lower home values have a negative effect on foreclosures.

    It’s a feedback loop. Tighten underwriting guidelines to try and slow down default rates and that has a negative effect on the home prices as fewer buyers can qualify and we see rising inventory which leads to…..lower sale prices which leads to……higher foreclosures.

    Now add in higher interest rates, higher unemployment, and a full-on recession and we’re talking even more pressure on those foreclosure numbers.

    I have no predictions on how low home values will get, only a prediction on the sheer amount of TIME it’s going to take to work through all the foreclosures.

    I suppose massive government intervention could help. What would we do….Demand that banks slash principal balances and freeze teaser rates en mass?! Permanent pick-a-pay? Now that would be frightening.

  36. 36
    Herman says:

    What this site needs is a feature where people can go on permanent record with predictions. I can’t keep straight who was right, who was wrong, and who keeps changing their tune.

  37. 37
    John says:

    Too bad they are going to pass the bill eventually, maybe as soon as this week. But watch out if the stock market continues lower after rebounding for a few days.

  38. 38
    Ray Pepper says:

    It pains me to say this………………….Gulp……………….Jillayne is most likely correct. People are not stupid. They will NOT stay in homes they are upside down in.

    But, a rumor has been circulating at Countrywide that in the coming 6 months they will Reappraise owner-occupied properties and will base the new payment on the New appraisal price. The amount realized as a loss to the bank will be recognized as income for the home owner and the caveat will be that if you sell your home in the 1st 5 years you will have to give back 50% of the gains.

    One helluva deal that will definitely curb the unprecedented foreclosures coming. But, you didn’t hear it from me.

  39. 39
    Jillayne says:

    Ray if you get confirmation of that Countrywide policy anywhere in writing, please do share.

    If that’s in the fine print right now and homeowners are signing that without being fully informed…..predatory lending all over again?

    Or homebuyers signing without reading what they’re signing all over again?

    Maybe Countrywide’s policy will be timed to coincide with HR3221 which brings with it those new provisions. October 1st I believe….maybe they’ll do that with loan modifications? Just guessing.

  40. 40
    Greg says:

    Prices are still holding up in my neighborhood for now. I’m seeing comparable sales at 110% of my purchase price, and I bought in early 2005. (Fremont)

    I still expect it to go down to my purchase price and maybe even a bit below, and then start to slooooowly climb back up. I actually welcome this, since it will make my next home purchase more affordable. I’ll have the equity I have from making a reasonable down payment and some premium. Glad I took a reasonable fixed-rate loan.

    I’m more worried about the economy as a whole than my house price. I can always just stay in my house and wait it out, given employment, etc. If the economy tanks, however, jobs may become scarce, and then who knows.

  41. 41
    Ray Pepper says:

    Jillayne if this occurs it will be huge for stopping the impending foreclosures. I can only imagine the back-up and flood of calls they will be dealing with. But, it would work !

  42. 42
    Matthew says:

    If the economy tanks? The tankage is already in progress.

  43. 43
    shawn says:

    I agree with vboring. And add that not only do I see homes I can now afford, but I also am seeing homes priced where I will not feel like a dupe buying them.

  44. 44
    Civil Servant says:

    Ray @ 38 — How can a decline in property value simultaneously be counted as a bank write-off and income to the homeowner? Unless some actual cash money is being given to the homeowner, I don’t see how the IRS definition of “income” is met. If the home remains mortgaged and is merely reappraised, this is just an on-paper loss. Or am I missing something? It truly is a new world out there.

    Greg @ 40 — If you’re seeing 10% appreciation since early 2005, this doesn’t hold up against inflation over the same period, and your d.p. would have worked harder for you in a CD, for instance. Also don’t forget the 7.8% transaction cost should you suddenly have to sell or leave town. No schadenfreude here, just pointing out what seems to be a common perceptual fallacy among many newish homeowners I know.

    Are prices really holding up in Fremont? That’s not one of the neighborhoods I geek out on, but there is some stock that’s just sitting and sitting.

  45. 45
    didn't just fall off the turnip truck says:

    Civil Servant@44,
    Historically debt forgivness (can) count as ordinary income. I seem to think as part of the ‘mortgage forviness act of 2007’ the rules were temprarily changed. The gov could certainly decide to change them again.

    Should have googled prior to posting … here is a link to the irs site with more info …..
    http://www.irs.gov/individuals/article/0,,id=179414,00.html

  46. 46
    deejayoh says:

    20% down brings the index to 153 and 30% down brings the index to 135. When seattlebubble started, the index was 156.

    Check my math, aren’t 153 and 135 lower than 156?

    Bueller?

  47. 47
    Civil Servant says:

    Oh OK right, I totally forgot about that one. Thanks Turnip. Everyone’s so helpful today, I really appreciate it.

  48. 48
    Seeker says:

    http://www.redfin.com/WA/Kirkland/816-7th-St-S-98033/home/463781

    Seattle market still belongs to sellers..
    04 – 370k
    08 – pushing $1,269,000

  49. 49
    LUC says:

    Seeker, that house has been on the market for 428 days according to Redfin.

  50. 50
    what goes up must come down says:

    LUC what is give or take a year? LOL.

    See people seem to forget that what the house is marketed for doesn’t have anything to do with what it sells for until it actually sells.

    I want 2million for my old nike running shoes — I guess that means they are worth 2million, eventhough no one has bought them yet.

  51. 51
    deejayoh says:

    Seeker // Oct 1, 2008 at 2:27 am

    http://www.redfin.com/WA/Kirkland/816-7th-St-S-98033/home/463781

    Seattle market still belongs to sellers..
    04 – 370k
    08 – pushing $1,269,000

    and it was a teardown. built in 2005.

  52. 52
    wakeup says:

    > Check my math, aren’t 153 and 135 lower than 156?
    LOL.
    You call that a bubble? You can find that kind of bubble everyday in the stock market or even in grocery stores.

  53. 53
    deejayoh says:

    I think we have a difference of opinion on the term

  54. 54
    jon says:

    “the caveat will be that if you sell your home in the 1st 5 years you will have to give back 50% of the gains.”

    That is simply the HOPE bill from a few months ago coming into effect.

  55. 55

    […] twenty Case-Shiller-tracked 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 […]

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.