Case-Shiller: Summer is Over for Seattle Home Prices

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to August data,

Down 0.3% July to August.
Down 6.1% YOY.
Down 28.7% from the July 2007 peak

Last year prices fell 0.8% from July to August and year-over-year prices were down 2.4%.

After increasing for five months in a row from March through July, Seattle’s index dipped a bit this month. I guess the usual spring/summer boost is already wearing off.

Here’s an interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities, courtesy of Tableau Software (check and un-check the boxes on the right):

DC and Detroit are the only two cities in YOY positive territory in the latest update. What an odd pair. Meanwhile, after almost every city showed month-to-month gains in July, half are now in negative territory as of August.

Case-Shiller HPI: Month-to-Month

Seattle continues to come in near the bottom of the heap in month-over-month changes.

Hit the jump for the rest of our monthly Case-Shiller charts, including the interactive chart of raw index data for all 20 cities.

In August, fifteen of the twenty Case-Shiller-tracked cities experienced smaller year-over-year drops (or saw increases) than Seattle:

  • Detroit at +2.7%
  • Washington, DC at +0.3%
  • Denver at -1.6%
  • Boston at -1.7%
  • Dallas at -1.9%
  • Charlotte at -3.4%
  • New York at -3.4%
  • Los Angeles at -3.5%
  • Miami at -4.6%
  • Cleveland at -4.8%
  • San Francisco at -5.3%
  • San Diego at -5.5%
  • Chicago at -5.8%
  • Las Vegas at -5.8%
  • Tampa at -5.8%

Just four cities were falling faster than Seattle as of August: Atlanta, Portland, Phoenix, and Minneapolis.

Here’s the interactive chart of the raw HPI for all twenty cities through August.

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

In the forty-nine months since the price peak in Seattle prices have declined 28.5%, the same as last month, up 2.4 points off the low. Four years. What a ride.

For posterity, here’s our offset graph—the same graph we post every month—with L.A. & San Diego time-shifted from Seattle & Portland by 17 months. Everyone but Los Angeles got a bit of a bump in August. Year-over-year, Portland came in at -7.6%, Los Angeles at -3.5%, and San Diego at -5.5%.

I think this graph is still worth posting if only to display how the government’s massive intervention in the market screwed with the natural flow, causing all the markets to rise simultaneously, and once the artificial support was removed, to come crashing back down to reality simultaneously.

Case-Shiller HPI: West Coast

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

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

(Home Price Indices, Standard & Poor’s, 10.25.2011)

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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.

32 comments:

  1. 1

    Slow Seattle Sales Rates

    Means a limited amount of buyers taking the plunge….it also can mean that the month to month decreases are mitigated as this limited qualified buyer percentage either pays too much or waits forever for banks to unfreeze the hidden foreclosed inventory for better prices ahead.

  2. 2
    MacroInvestor says:

    Just looking at the Altos chart on Tim’s home page, summer started ending July 1. Since then the median is down roughly 6%. Now it’s down to last winter levels.

    Yes, the median has issues (as every number does) but this is for Seattle — supposedly the strong market with bidding wars all year.

  3. 3

    RE: MacroInvestor @ 2

    Macroinvester:

    Assuming these numbers equally apply to the Seattle area, another anchor on the home price plummet is consumer confidence….its back to the horrifying March 2009 level again….

    http://finance.yahoo.com/news/Consumer-confidence-tumbles-rb-1158156394.html?x=0&sec=topStories&pos=main&asset=&ccode=

    They say consumer spending is 70% of the economy.

  4. 4
    Teacher_Greg says:

    I bought a place in May of 2010 and just had an appraisal for a refi, the value according to the appraisal is essentially the same as I paid (actually up $5,000 or less than 1%). I am not planning on selling anytime soon and knew that going in I was going to take a beating in terms of equity, but I bought anyway. So no need to hate on me/call me an idiot etc. etc. yadda yadda yadda.

    Here is my question: I thought that with the increasingly tight lending standards that appraisals were under increasing scrutiny. The comps this guy used did seem to support his conclusion that since May of 2010 the value of my house has stayed roughly constant. What gives? If the median/CS etc. says that values are down 6% just this year alone why is my value not down 6%.

  5. 5

    RE: Teacher_Greg @ 4 – Not all areas behave the same. Give me some idea where you live (e.g. Bellevue east of I-405) and I’ll let you know what the median for the smaller NWMLS area has done.

    Also, the median and Case-Shiller are affected by the mix. REOs and short sales are driving down the both. The appraiser was likely looking at non-distressed sales (something you could probably determine).

  6. 6
    The Tim says:

    RE: Teacher_Greg @ 4 – Well, Case-Shiller is a composite of King, Snohomish, and Pierce counties. Presumably you live in a neighborhood that is slightly stronger than the 3-county average performance.

  7. 7

    RE: The Tim @ 6

    Or the Appraisser did what the King County appraissers apparently did the last couple years, they omitted the low units from their average of the neighborhood….but us owners are sheeple, when we get our home appraissed high we think “good”….now try to sell it for that amount [and smile when you get your property tax bill based on assessed value], the rubber hitting the road.

  8. 8

    RE: Teacher_Greg @ 4
    Appraisals are very localized.Appraisers look for recent sales of similarly styled, sized, and aged homes. So if there were enough sales, it could be homes that were within 1/4 of a mile.
    And the Seattle area market is clearly not just one market. Skyway may have declined 40% from the peak, but the top of Queen Anne and Ravenna have declined far less than that, maybe one third of the Skyway decline.( Numbers pulled out of my butt, not confirmed or authorized by the NWMLS)

  9. 9

    RE: Ira Sacharoff @ 8 – I just pulled the King County SFR for May 2010 and September 2011. The non-distressed median went up about $17,500. Number also not compiled or guaranteed by the NWMLS.

  10. 10
    Dave0 says:

    Wow, What happened in Atlanta to cause such a huge MoM drop?

  11. 11
    dvdivx says:

    You know Real Estate is bad in Seattle when Detroit looks like a boom market.

  12. 12
    Scotsman says:

    And so begins the winter of our discontent. . .

  13. 13

    By dvdivx @ 11:

    You know Real Estate is bad in Seattle when Detroit looks like a boom market.

    You’re obviously looking at the wrong chart. Detroit is well below 100, which means it’s below 2000 values.

  14. 14
    Jonness says:

    Things aren’t as bad as you guys are making out. If worse comes to worse, you can always move to Federal Way.

    http://www.redfin.com/WA/Federal-Way/507-SW-293rd-St-98023/home/346630

  15. 15
  16. 16
    Lurker says:

    The Tim, did I hear you being called a real estate scientist this evening on KUOW? ;)

  17. 17
    ChrisM says:

    RE: Jonness @ 14 – Heh, again I have to ask the local Realtors(tm) about the ethics of lowballing. Now I understand you can’t comment on active listings, but let’s assume strictly for the sake of argument the seller originally lists at $1 MM and then four months later drops the price to 500k.

    What is an unoffensive lowball? Could I submit an offer for, say, 600k three months into the listing?

    On a totally unrelated topic, imagine the fun if an agent could turn in another agent for MLS violations to collect part of the fine. Would that be beneficial for the industry as a whole?

  18. 18
    Dan Panic says:

    As a Philadelphia native, I’m always disappointed in how you never show statistics for my birth city. They are, after all, only the 5th largest metro area in the United States.

  19. 19
    Jonness says:

    By ChrisM @ 17:

    RE: Jonness @ 14 – Heh, again I have to ask the local Realtors(tm) about the ethics of lowballing. Now I understand you can’t comment on active listings, but let’s assume strictly for the sake of argument the seller originally lists at $1 MM and then four months later drops the price to 500k.

    What is an unoffensive lowball? Could I submit an offer for, say, 600k three months into the listing?

    From what I’ve seen, the ethics of lowballing are extremely seller dependent. My girlfriend and I made a more than fair offer on a home that had sat on the market for about a year, and the sellers acted insulted. So I raised my offer, and the sellers wanted even more, so I gave up.

    Four months later, I went to look at a WAY nicer house that was totally flat and buildable. It had sat for well over a year and had been reduced by about 40% from what it was originally listed at. I talked to the owner about the house and felt it had just too much going for it to lowball. It was an estate sale and was an absolutely gorgeous house on two unbelievable waterfront lots. I told my girlfriend if it was still there in a month, I would offer the top of my affordability range for the house and cross my fingers that I didn’t insult the seller. But before the time was up, the seller took an offer lower than what I would have offered. The lower offer just happened to be what I had offered on the first not even close to comparable house that I insulted the seller on.

    So it turned out, I didn’t make the offer on the nicer house because I didn’t want the seller to think I was a jerk. But my being nice about it ended up costing the seller a lot of money because she took a lower offer. And a day hasn’t passed that I haven’t regretted failing to offer on the house right away.

    BTW, the first house I offered on and ended up insulting the seller on just went pending for WAY lower than my offer.

    I will never be too intimidated to lowball a house again. I am way past that point. But my gut feeling is they need to sit a good long time before the seller will take the lowball seriously.

  20. 20
    Jonness says:

    By Dan Panic @ 18:

    As a Philadelphia native, I’m always disappointed in how you never show statistics for my birth city. They are, after all, only the 5th largest metro area in the United States.

    Dan: It’s not intentional. Philadelphia is not part of the monthly Case-Shiller 20-city index, so Tim doesn’t have readily available data to show you.

    I can get you quarterly data on Philadelphia if you are interested.

  21. 21
    ARDELL says:

    RE: ChrisM @ 17

    “Heh, again I have to ask the local (real estate brokers) about the ethics of lowballing.”

    Actually the ethical offense is more often (and I think always) stated against the agent who lists the property for way more than what it is worth, than a buyer agent representing a low ball offer against that overpriced listing price.

    I just checked on three I did as to % of original list price. All 3 were my buyer vs seller clients. One we obtained at 63% of original list, one at 54% of original list and one at 44% of original list. There is no ethical violation in obtaining the properties for my buyer clients at these low %s of the original asking prices. There IS technically an ethical violation against the seller’s agents for listing those homes for twice or nearly twice what they were actually worth.

    When I walk into a seller’s house and he wants to sell it for double what it is worth, I tell him what it is actually worth and leave. The agent who agrees to list it for well over what it might appraise for, is the one with the ethical problem. I’m not talking 5% or 10% or a range that is within reason. Especially for a property that has no true comps and is difficult to price more accurately. But being 37% to 56% “off” as to list price is the ethical problem…not the lowball offer.

    That said, the normal successful strategy for getting the homes for that much less than asking is not necessarily writing it up that way, nor is it waiting quietly in the shadows. The first step is to figure out what the house is worth. The second step depends on the situation. Often most of the exchange is done verbally and then put into writing as the parties are closer together. That way if someone comes in lower, the seller is aware that there is another buyer within reach willing to pay more than that.

    Time is also a factor, but if the house is going to be sold vs taken off market, the only thing standing between you and the house is another buyer who is willing to pay more than you. It is not offensive (to the point of not succeeding in your goal) to lowball, if done the right way.

    In your example you can submit an offer at $500,00 if you have some evidence that the offer price is reasonably close to the property’s value and what it will end up selling for. Every million dollar house does not sell for $500,000. You have to have some rational basis for thinking this on this particular property, as I did on the ones I mentioned. I did not try to convince the seller that our offer was more “right” than his asking. We wished him the best in finding someone willing to pay that. But we made out intentions clear while giving him space to play out what he was trying to do.

    In all three cases, my clients ended up with the house. But it usually works better and best when the agents take the brunt of the abuse vs the buyer or the seller. Most of these wide-spread negotiations happen between the two agents, not the buyer and the seller. That preserves the buyer and seller relationship. When playing “good cop – bad cop” the agent usually has to be the bad cop, not the buyer. :) Your agent has to believe in your price in order to get the job done, and usually has to present it as the agents opinion of value vs the buyer’s opinion of value.

    If your agent thinks you are “lowballing” then you are either too far off the property’s actual value or you need a different agent who believes in that low price to figure out a way for you to succeed in getting the property at that price.

    The agent for the seller has to believe and get behind that asking price to represent the seller well…or refuse to take the listing. The agent for the buyer has to believe in the offer price to represent the buyer well, or disclose to the client that he/she might not be the right agent to assist in that endeavor.

    Once the two agents agree…the rest is usually not all that difficult. It may take time…but is doable. Who is more “right” is really decided by the other buyers in the marketplace. No one can be smarter than the market.

    The “ethics” of “lowballing” is only an issue if your agent believes it to BE a “lowball” as to the value of the property, and has nothing to do with what the seller is asking.

    The only time I have seen lowballing be an ethical violation is if the owner is not represented by an agent and is elderly or of limited mental capacity. If you knock on a person’s door who is not listed for sale and offer them 1/2 what their property is worth, as example. I have seen this happen in “off market” transactions from time to time. Sad really. But rarely does a listed property have that problem. It’s usually an “off market” transaction and an owner who was not intending to sell.

    If the property is truly worth only half what the seller is asking…pointing that out and making that offer is not an ethical violation, to the best of my knowledge.

  22. 22

    RE: ChrisM @ 17 – Your 40% below list offer probably wouldn’t insult an agent planning on dropping the price 50%. And assuming they could convince the client to drop the price 50% the seller probably wouldn’t be insulted either.

    Interesting question about getting part of the fine, and whether that would improve things. I think a better approach would be to make reporting rules violations mandatory. That’s how things work in the attorney world in certain situations (e.g. if you discover your client committed perjury, you need to report that.).

  23. 23
    David Losh says:

    RE: ARDELL @ 21RE: ChrisM @ 17

    Thank you for your kind comment.

    Ardell really developed the strategy for making an offer. There are a couple of unethical things in low balling that I find offensive. One is when a buyer makes ofers on multiple properties at what they know are really cheap prices in hopes one of those offers will get taken. Some buyer make an offer a day until they get something. The second thing is when a buyer makes an offer in bad faith; when even if they get the seller to agree they still want to nickle, and dime the deal. Some agents encourage people to make low offers just to beat up the seller.

    Any offer made in good faith is a good offer. Ardell is right that it should betetween the agents to work it out. Real Estate is two individuals coming to a meeting of the minds, you just never know what will happen.

    Just a story that happened to me is that I had a young couple where the wife loved the house. She just loved the house, and wanted to go back to see it. It was outside of the price range we were looking, but she just had to see it. The sellers happened to come back to the house while we were there, and the wife started asking questions, saying how much she just loved this that or the other. I was mortified and tried to get my buyers out of there. I got a call from the agent telling me what a scum bag I was for talking with the sellers.

    Well my buyers kept looking because this house was out of the price range. A couple of days later the agent called me to ask where my offer was. There was another offer that the sellers didn’t want to accept until they saw mine. She and I were just kind of on the sidelines while the whole thing came together.

    You just never know.

  24. 24
    Dirty Renter says:

    RE: Jonness @ 19
    Great story, and lesson for all!
    I bought an original Max painting for 85% off, which I thought I had no chance of buying when I made the offer. On the other hand, like you, I daily regret not buying a friend’s ’57 Vette for $10k, when he drove it over and said he wanted to give me first dibs.

  25. 25
    Ray Pepper says:

    RE: ChrisM @ 17

    lowballing? Is their any other way to make an offer in a depreciating asset environment??

    Fact is every transaction is different with many moving parts. Time on market, Amount owed, amount paid, agents involved, it just goes on and on..

    But, I will tell you this…….Before I write up any offer I engage with the Listing Agent or hopefully the Seller (if its an MLS 4 Owner type Listing). These first 30 seconds will tell you immediately if there is a possibility of a closing for my client and their “low ball” offer…

    BTW…there are many different opinions of what a low ball offer is. Some of our Buyers want to offer to high and they consider their offer low ball. We offered yesterday 30k on a home originally listed for 120k, then lowered to 64k, and I find 30k SPOT ON. Any more would be too high for this particular listing..

    Again each deal is different……..

  26. 26
    ChrisM says:

    Ardell, Kary, David and Ray – thanks all for your thoughtful remarks.

  27. 27
    Marc says:

    I can’t believe I’m saying this but I agree totally with both Ardell @21 and Ray @25. They summed it up pretty well. Just throwing a low ball offer at the seller and listing agent without priming the pump in advance and preparing for the possibility of a lengthy seige is often a waste of time and energy.

  28. 28
    Ray Pepper says:

    RE: Marc @ 27

    Marc you are finally realizing that I put my socks on in the morning just like you. One foot at a time. I’m no more Superior to you being a Broker and you being an Attorney. You need not idolize me and be shocked when we come to an agreement on a point of topic. This may happen from time to time…

    The unyielding pool of Attorneys defaulting on their student loans and finding work in alternate fields (Costco) is mind boggling. I wonder how many Attorneys are part of the Wall Street movement wanting their student loans paid off….

    I must begin to dig!

    http://www.myinsidercoach.com/career-paths/residents-graduates/new-lawyer-alternative-career-options/

    http://www.frumforum.com/ive-passed-three-bar-exams-and-cant-find-work

    http://flustercucked.blogspot.com/2010/03/why-wont-unemployed-lawyers-find-jobs.html

    http://gawker.com/5593651/old-lawyers-are-taking-all-the-lawyer-jobs

  29. 29
    2kt says:

    RE: softwarengineer @ 3

    FedEX and UPS say shipping will be up this Christmas, Ford posted its best quarter in years. On this site, however, the regulars, as always, are getting ready for another funeral. Good grief.

  30. 30
    David Losh says:

    RE: 2kt @ 29

    Don’t forget that the European debt crisis has been resolved today. It looks like investors will be taking a 50% loss on Greek bonds. China stepped in to prop up the banking system.

    I’ll post the rest on the who stole your home thread.

  31. 31

    By David Losh @ 30:

    Don’t forget that the European debt crisis has been resolved today..

    Did they cure cancer too?

    Stated differently, I think you’re being a bit over-optimistic.

  32. 32
    David Losh says:

    RE: Kary L. Krismer @ 31

    it’s on the who stole your home thread.

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