Poll: Where is the bottom for Seattle-area SFH Prices?

Please vote in this poll using the sidebar.

Where is the bottom for Seattle-area SFH Prices?

  • 20% off peak (now). (22%, 84 Votes)
  • 20% to 30% off peak. (26%, 99 Votes)
  • 30% to 40% off peak. (28%, 107 Votes)
  • 40% to 50% off peak. (11%, 43 Votes)
  • 50% or more off peak. (13%, 49 Votes)

Total Voters: 382

This poll will be active and displayed on the sidebar through 11.15.2008.

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.


  1. 1
    Dave0 says:

    I voted for “now, 20% off” but I voted for the 20%, not now. We are 10% off peak right now, not 20% according to your latest case shiller graph.

  2. 2
    Matthew says:

    50% or more

  3. 3
    deejayoh says:

    I think you should frame the poll as “how far will prices roll back?”. We are at late 05/early 06 right now.

    FWIW – here is the translation (base on the earliest time that price level was comparable)
    10% = June 2006
    20% = August 2005
    30% = October 2004
    40% = June 2002
    50% = July 1999

  4. 4
    Matthew says:

    I was in the 40 percent (2002-2003) camp until more recently. I think Seattle could very well become the Detroit of the PNW.

  5. 5
    The Tim says:


    Sorry, I should have been more clear. I was referring to the median price as reported by the NWMLS, which is just barely shy of 20% as of the October numbers.

  6. 6
    deejayoh says:

    Tim – Is that chart right? I thought Pierce was off more than Kingco

  7. 7
    The Tim says:

    King Co. SFH Median
    Peak: $481,000 (July ’07)
    Latest: $392,000
    Drop: 18.5%

    Pierce Co. SFH Median
    Peak: $291,500 (Aug. ’07)
    Latest: $249,000
    Drop: 14.8%

    Snohomish Co. SFH Median
    Peak: $381,719 (July ’07)
    Latest: $333,760
    Drop: 12.6%

  8. 8
    jon says:

    The shipping industry is in pretty bad shape.

    “Quentin Soanes, managing director of Braemar Seascope, a London shipbroker, said that, for the worst-hit sizes of dry-bulk carriers, 40-50 per cent of existing orders could be cancelled.”


    That doesn’t portend well for the airplane industry. Seattle and Tacoma are port cities, so that aspect of international trade may affect us as well.

  9. 9
    Sniglet says:

    I am in the more than 80% decline off of peak (big surprise). I think we’ll be revisiting prices from the early ’90s or ’80s before this crash has run it’s course. This is NOT just a the normal cyclic downturn we have known. We are facing a major GLOBAL credit bust that is going to shake the global economic system severely, clearing out all the mal-investment and leverage wherever it may be.

    Unfortunatley, our region won’t be immune from this depression. I still point to the fact that we have a higher portion of home-owners without equity than at any time in the past. This leaves our real-estate market extremely fragile as these home-owners have nothing to fall back on when the economy goes south (i.e. they can’t sell if they lose a job, etc).

  10. 10
    WaitingForSanity says:

    I expect existing houses to depreciate at a rate of about 5% per year (after inflation) indefinitely. Houses are no different that any other consumer product.
    (I notice the price of my Toyota 4Runner has declined since I bought it. I wonder when it will “bottom”.)
    The question is framed poorly. As new houses are built, the total value of Seattle housing will go up, even as the value of each particular house goes down. (This is similar to how the the total value of all cars on the road increases each year, even though the value of any particular car decreases.)
    This is a tricky concept for people to understand.

  11. 11

    I’m predicting a bottom of about 30 percent from ther peak, or 10-15 off current prices. But I also don’t expect prices to rise again for several more years.

  12. 12
    CMT says:

    The credit crisis is global and will result in all areas of the economy coming under significant pressure. The dollar is no longer pegged to gold and will depreciate against against other currencies as the government prints money and attempts to inflate themselves out of the crisis. Interest rates will increase and could exceed 10% by 2010 . Unemployment will increase as customers cancel orders or delay investment which has underpinned growth over the past 8 years. Boeing’s order book is predominantly options which will reduce as customers cancel due to the cost of credit and customer economies enter recesssion.
    The result will see house prices reducing significantly, where the bottom is I dont know, but it feels at least a 30% reduction is required to bring us into line with other areas of the country..

    An economy based on easy credit, with us borrowing money that we cannot pay back to china and oil producing states (deficit $800Trillion) has the potential to bankrupt the US and lead to hyperinflation.

    Enough said

  13. 13
    anony says:

    Ira has a point. And it goes straight to the difference between nominal values and real values. Is the predicted price drop inflation adjusted, or not?

  14. 14
    David Losh says:

    There are properties that sell every day, fast market, or slow, that are good deals.

    That being said we saw a 14% to 17% price increase between 2006 to 2007. It was double digits for two years before that. Let’s be fair and say the run up was 40% from 2003 to 2007.

    Next let’s take into account that money moved from tech stocks into Real Estate from 1998 to 2001. That process started, and the Fed finished, by giving Real Estate a return of 10% for those three years.

    That’s a total of 70% increase in the rpice of Real Estate. Then if you figure Real Estate experts are spouting Real Estate doubles every ten years then that would be a 100% increase since 1998.

    Realistically Real estate appreciates at about the rate of inflation, or 4%.

    Cumulative U.S. Retail Price Inflation (Annual Average)
    1998-2008 = 29.23%

    So if we deduct 30% or 40% from the 100% that’s proclaimed we end up with a need for a 60% to 70% reduction in the price of Real Estate.

    Let me be real clear that this is the reasonable rate of reduction. I am thinking we are going to lose, as Sniglet has been saying, the 80% from peak and that is just a reality.

  15. 15
    BrianL says:

    Median family income in King county is what, 65k? Given that, I can’t see the cost of a median house falling below 100k without a systemic failure in the US (ie wide scale depression to the point where no one can afford housing period).

    Yes, unemployment is going to go up significantly over the next year or two. And yes, we have deflation by some definitions at the moment (lots of reasons – not going to get into that debate), but houses dropping to nearly 1 years pay? That seems far fetched.

  16. 16
    BrianL says:

    David, I don’t follow your math. Perhaps you could explain? Let me try following with an example. Can you point out where my math goes bad? I’m going to go with 30% inflation to simplify the numbers.

    1) A house started with a price of 200,000$ in 1998.

    2) In 2007 (or whenever it was at peak), the price was 400,000$ (it went up 100%). A price decrease of 50% would take the house back down to 1998 prices assuming no inflation.

    3) 200,000$ adjusted for the 29% cumulative inflation would be 260,000$. 260,000/400,000 is 65% – this is what we’d expect the house to retain. That means price drop of 35% to revert to the inflation adjusted value from 1998.

    I’m running off of the numbers you supplied – I have no idea how valid they are. Can you spot where my math went bad?

  17. 17
    Euro says:

    The problem with just looking at the naked numbers is that you only look at the properties that actually sold. Which in this market increasingly means just the people who have no other option than to sell, even with a loss. I would expect most who bought their property after say 2003 to just forget about moving because they don’t want to bring money to the table, or if they do, to chose for renting out instead of selling (which is what I am doing in fact). That might bring down the rental prices a little bit, but only as long as supply increases, and with the foreclosed as a counter force (unless they left Seattle, I’d expect them to rent now). It is reasonable to expect supply/ building to dry up as prices come down, in which case the market just will be completely frozen.

    Obviously, if the economic giants in Seattle crash, it’ll be very bad, maybe another Detriot – though at least we have the pretty surroundings (yeah, and the rain) ;-). But what if the local economy stays stronger than most other parts of the country? Call me naive, but I would expect more people to move here. As renters of course, because who wants to buy a house in this economy? If that were to happen, owners would have even less incentive to sell, because they can make money renting out. Which in turn of course would start the selling prices to go up again.

    We’ll see what happens… if there’s anything that 2008 shows us, it is that anything is possible!

  18. 18
    aman says:


    It sounds like you’re trying to say that houses are selling for less that what they’re “really worth.” The selling price of a house is EXACTLY what it is worth. It is the SALE prices which determine the market, not the asking prices, and I don’t see any reason for buyers to start paying significantly more than comps anytime soon.

    Prices still have a long, long way to fall before renting out a home doesn’t incur a substantial loss each month. I think as the reality sets in that 2007 price levels won’t be seen again for a LONG time, more and more sellers will accept taking the loss now rather than over an indefinite time period, or worse selling for an even bigger loss later on.

  19. 19
    Matthew says:


    How did the Seattle economy do during the last recession, better or worse than the rest of the nation?

  20. 20
    David Losh says:

    Of course Brian you are right about the math. Prices are going down 35% to 50% from what?

    Houses as well as commercial property prices went up way beyond reason. Saying a property is worth what some one will pay for it is ridiculous.

    The numbers are the numbers. Many people over paid for properties. Many people always have over paid and continue to over pay today. Many people don’t care what they pay, it’s just money.

    This blog has introduced the idea of price into a sales game. It has also introduced the idea that there is a Real Estate sales game out there. What I think is worse is that Loan Originators sold mortgages based on that sales game.

    The lender, the bank, or the investor is supposed to be the stop gap in Real Estate prices. Lenders are supposed to look at value. Just because a few thousand idiots drove up prices does not mean every one should pay the difference.

    To determine value depends on your goal. There is a need to clean up the Real Estate business so you can get the advice to make an informed decision.

    I’m surprised by how little information there is about Real Estate especially on the internet. This repeated question about how far the market will fall just shows that people are misinformed about how to make an offer, or determine Real Estate value.

    Yes you do need a person to guide you in the process, we all do. I ask for advice all the time about Real Estate, about houses, or value. My fortune is that I know who to ask and what to ask.

  21. 21
    Matthew says:

    If you study bubbles in economics you will see that nearly every bubble “over corrects” on the way down. If you believe to our bubble began in 02-03, then a return to 01 would not seem unreasonable.

    If you believe that the bubble began earlier, such as 1999-98, then 97 seems logical. (adjusted for inflation of course)

  22. 22
    softwarengineer says:


    I predict no end to home price and household income decreases without an immediate depopulation of America.

    You can take my prediction to the bank.

    The decline won’t be “L” shaped, it will be “I” shaped [continuously decreasing without end], without American depopulation ASAP.

  23. 23
    Euro says:

    Matthew, since the context and causes are very different this time, I don’t think there is much to learn from Seattle’s last relative performance.

  24. 24
    Eric says:

    My family moved from Bay Area in late 2006 to Chicago suburbs. We have always had our eye on moving to the NW, with Seattle being one of our top choices (Portland is another). I understand that Seattle typically follows So Cal market with an 18-24 month lag. Do you really think that Seattle will follow same trajectory as So. Cal?

  25. 25
    matthew says:

    Please Euro, I’d love to hear some reasons why Seattle will be different than other areas of the U.S.

    Particularly since WaMu is toast and Boeing may be packing up and leaving.

  26. 26
    BrianL says:

    I think Euro is saying that the world wide economic situation more severe than it in some other bubbles. There are also different forces at play – net creditor vs debitor, a global economy, etc. For that reason, using it as a model for recovery anywhere may not be very accurate.

    “History does not repeat itself, but it does rhyme.”

  27. 27
    Herman says:


    I love the headlines, but your last comment doesn’t make any sense. Depopulation would reduce the demand for housing and would cause prices to fall further.

  28. 28
    Scrawny Kayaker says:

    Anyone know where a histogram of household incomes is available? Someone recently posted the astute observation that median home price should not be related to median income, since the lowest incomes will be unable to buy. The 60% income level was suggested as the effective indicator.

    Is there any better way to estimate this price-supporting income? One method would seem to be to take the number of owner-occupied properties and simply integrate down along the income histogram until this number of households is reached, and take the median income of that population as the median home buyer.

    I suppose this has many naive assumptions. Feel free to point them out or provide links. I’m fairly new to this blog, so missed it if this has been shot down before.

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