Case-Shiller: Seattle Back in the Black

Let’s have a look at the latest data from the Case-Shiller Home Price Index. According to May data, Seattle-area home prices were:

Up 2.6% April to May.
Up 0.6% YOY.
Down 28.6% from the July 2007 peak

Last year prices rose 1.1% from April to May and year-over-year prices were down 7.0%.

I’ll be the first to point out that I was wrong. Back in March when January’s data came out (and prices were still hitting new lows), I said that “I would not be surprised to see us hit zero year-over-year by April.” I was off by one month. It took until May. Note that even when the tax credit was in play, Seattle’s Case-Shiller HPI did not manage to break into the black year-over-year.

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):

In May every city gained. Seattle came in slightly above the average, but not in the top tier with Chicago, Atlanta, and San Francisco.

Case-Shiller HPI: Month-to-Month

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 May, ten of the twenty Case-Shiller-tracked cities gained more year-over-year than Seattle (versus eleven in April):

  • Phoenix at +11.5%
  • Minneapolis at +4.7%
  • Dallas at +3.8%
  • Denver at +3.7%
  • Miami at +3.4%
  • Washington, DC at +2.8%
  • Tampa, FL at +2.5%
  • Charlotte at +0.9%
  • San Francisco at +0.6%
  • Detroit at +0.6%

Eight cities gained less than Seattle (or were falling) as of May: Portland, Cleveland, Boston, San Diego, Los Angeles, New York, Chicago, Las Vegas, and Atlanta.

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

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 fifty-eight months since the price peak in Seattle prices have declined 28.6%.

Lastly, let’s see just how far back Seattle’s home prices have “rewound.” As of May: November 2004.

Case-Shiller: Seattle Home Price Index

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

(Home Price Indices, Standard & Poor’s, 07.31.2012)

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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.

29 comments:

  1. 1

    In the open thread I said I viewed this as further evidence C-S is affected by mix, and questioned the usefulness of the data. Seeing the data in this way I can see one use for it–it’s probably useful for comparing the greater Seattle area to other parts of the country. There’s probably more consistency with the C-S data from area to area than there is using various MLS data sources. Still though, without knowing the impact of distressed sales in each city, I’m not sure how useful that is.

  2. 2
    DMac says:

    RE: Kary L. Krismer @ 1 – To your last point, I can tell you what we experienced when we put our condo in Chicago on the market back in September, 2011. Our initial price was right in line with other condos with similar specs in our neighborhood that had recently been sold, and we had around a dozen showings (but no offers) over the next 45 days. Then…the foreclosures starting coming in waves…and waves…and waves. So many, in fact, that we had to drop our price three separate times in order to keep up with the falling curve. We had one offer that was pulled back when the prospective buyers realized that prices were only going to fall further, and the attempts to lowball us into 2000 – circa price levels were truly eye – opening.

  3. 3
    Dweezil says:

    Yoy gain is impressive, but I am still waiting to see if it is sustainable outside of the spring bounce. We shall see come november.

  4. 4
    The Tim says:

    RE: Dweezil @ 3 – That doesn’t make any sense. The whole point of using year-over-year numbers is that you eliminate seasonal factors. Hitting YoY positive can’t just be “spring bounce.”

  5. 5
    David Losh says:

    The entire index is up 2.2% I think, and in California the increases are more pronounced.

    It’s all low inventory, low interest rate talk.

    Did Case Schiller go positive for the tax credit?

  6. 6
    The Tim says:

    By David Losh @ 5:

    Did Case Schiller go positive for the tax credit?

    Some cities and the 10-city and 20-city composites did, but Seattle did not. See the first Tableau chart in the post.

  7. 7
    No Name Guy says:

    With the deterioration in the macro economic trends, it’ll drop back into negative YoY territory soon enough. The upturn is a head fake that the macro economic situation plus increasing foreclosures will take out quickly enough.

    A couple recent SB posts that make me think things are, at best, bumping along, before legging down again.

    https://seattlebubble.com/blog/2012/07/18/follow-up-offers-2012-are-finally-slowing-just-a-bit/

    https://seattlebubble.com/blog/2012/07/12/foreclosures-keep-creeping-back-up-2/

  8. 8

    By Dweezil @ 3:

    Yoy gain is impressive, but I am still waiting to see if it is sustainable outside of the spring bounce. We shall see come november.

    Ignoring Tim’s seasonality factors, or perhaps focusing in on a part of seasonality, if I’m correct about the mix issues as they relate to distressed properties, then you’d expect those properties to again make up a larger percentage of sales, and drag down the C-S number in the same manner it drags down the NWMLS median figures.

  9. 9
    ARDELL says:

    RE: The Tim @ 4

    Actually I would agree with Dweezil that a YOY increase in November (and December) would be more significant than YOY spring bounce numbers. The year has to end higher than it began to reverse a trend. What happens in the middle can get puffed up more by supply and demand, and not represent any trend at all.

  10. 10
    Sam says:

    RE: ARDELL @ 9 – How is YoY ending with calendar year more relevant than than ending in spring/summer? In fact, if majority of home sales seem to happen in spring/summer, one would think that numbers for YoY ending in spring/summer should more relevant for most real estate participants.

  11. 11

    RE: Sam @ 10RE: ARDELL @ 9 – How about this? It will really really really indicate something if December is higher than July.

    Now we just have to decide whether we determine that by looking at the NWMLS King County SFR median, the NWMLS King County SFR non-distressed median, the NWMLS King County SFR mean, the NWMLS King County SFR non-distressed mean, Case-Shiller, or some other data. ;-)

  12. 12
    Saulac says:

    Tim, could you make the C-S Seattle Home Price Index extended (back) a bit more? Maybe to where price have ever rewounded furthest? I am undertand correctly that there were two time that price has rewounded further than now? I think that info is helpfull but I am too lazy to digging the old posts. Thanks.

  13. 13
    ARDELL says:

    RE: Sam @ 10

    I would agree with your statement as to “more relevant for most real estate participants”. Absolutely true, as the average “real estate participant” is looking to buy a home within 6 to 18 months. Most within 3 to 9 months.

    Trends however are tracking “the recovery” and Spring Bump has too much emotional swing in it to be a market indicator. If the year ends in the same place where it began then we are still in the flat portion of the “L Shaped Recovery” regardless of how high the bump gets in Spring.

  14. 14
    Jonness says:

    By The Tim @ 4:

    RE: Dweezil @ 3 – That doesn’t make any sense. The whole point of using year-over-year numbers is that you eliminate seasonal factors. Hitting YoY positive can’t just be “spring bounce.”

    No, but it can be Spring bounce + liquidity trap induced low rates + distress induced low supply + a half decade of pent up demand on behalf of frustrated fence sitters.

    Actually, there has been a lot of pent up demand on both the buy side and the sell side. Market conditions currently dictate that the buy side pent up demand is barely winning the tug of war for the moment (due to massive, unprecedented, and unsustainable gov/Fed intervention). However, there is no guarantee this, so far very brief, errata in the data is a permanent trend. In fact, we saw an example of this same kind of temporary stimulus-induced trend during the $8K tax give-a-way when Ardell jumped on the bandwagon and called a bottom. But after about a year, the sugar ran out, and prices hit new lows.

    For the answers to today’s questions, we must look to the macro data and ask ourselves, what problems have actually been addressed and resolved, and what will sustain growth in our economy over the next five years? My unfortunate conclusion is the only thing we’ve done is increase the fiscal balance sheet by $5 trillion over the last 3 years. And for what? A 1.5% GDP rate? The truth is, if we even hint at slowing this unsustainable borrowing and spending rate, we will fall into The Great Depression 2.0.

    We are in a serious bind, and people are out partying in the streets pretending all our problems have been solved. I’m happy for all you Bernanke fan boys for the moment, but I’m guessing the free government alcohol and drugs won’t last forever. As Milton Friedman once said, “there is no such thing as a free lunch.”

    http://www.youtube.com/watch?v=YmqoCHR14n8

  15. 15
    David Losh says:

    If you take the Tableau charts, and set them back to 1987, then check all the cities it gives you a feel for why we are in for a long haul of housing price correction.

    Back in 1987, when we had the last banking scandal, http://www.fdic.gov/bank/historical/s&l/
    prices were spiking, then settled back to a normal rhythm until this last spike which was even bigger, yet no one has done anything since that spike other than prop up the banking system that we have.

    If you step back and look at the erratic behavior of the housing market, a YOY increase is meaningless.

    Banks need to be allowed to fail, assets held by banks should be released, and the market place may be in chaos for a while, but it will sort itself out.

    In Europe, I don’t see how anything will help except debt forgiveness.

  16. 16
    whatsmyname says:

    Great interactive chart for raw CS data. Click on select all, and you can see the chaos breaking out after Jan. 2000. Some places went wild, while others were barely tracking inflation. Then, in 2006-2008 things went south bad for everybody, albeit at different times. If you definitely were in a bubble, (SoCal, Phoenix, Las Vegas, Miami) things got bad; if you definitely weren’t in a bubble (Cleveland, Detroit, Dallas) things also got bad. 2008 was a universal nightmare, but then something happened in Q1 of 2009, and the lines clearly level out across the board. A few places continued to drift down, notably Atlanta, but the general change was positive, abrupt, and nearly universal. What could have happened in Q1 2009 that markets crashing for one year and markets crashing eighteen months and markets crashing for two years would all start to stabilize at the same time? What made things different than the previous 8 years? Does this chart belong on the politics and economics thread?

  17. 17
    David Losh says:

    RE: Jonness @ 13

    We may be on the same page, but mine reads differently.

    I think it was referred to today as an economic train wreck that is due after the election. It makes no difference who wins, the ground work has already been set for tax increases across the board, and spending cuts primarily in military, and entitlements.

    I don’t have a problem with that. The $5 Trillion can be absorbed, if we stay out of Iran, if we stay on course with tax increases, and spending cuts, if we look at the problem as though we all need to pay.

  18. 18
    whatsmyname says:

    RE: Jonness @ 13
    Bernanke fan boys? I see you share Milton’s fondness for the straw man. And don’t worry about that $5T. The last thing Milton tells us in your video is that it will be paid by inflation tax. That is a good, flat tax.

  19. 19
    whatsmyname says:

    By Jonness @ 13:

    For the answers to today’s questions, we must look to the macro data and ask ourselves, what problems have actually been addressed and resolved, and what will sustain growth in our economy over the next five years?

    I agree that macro economic developments will have in impact on real estate prices around the country and world, but I suggest that you too hit the select all button on the Case Schiller raw data. You will see a substantial divergence of results based on metro location alone, (+80% for DC to -30% for Detroit) for the time period Tim shows. Within each of these markets there is another wide fan of results based upon micro location and other market factors. As imprecise as this data is, it shows that location matters.

  20. 20
    sofwarenginer says:

    What Would Help

    If the statistical base included all sales, with no low ball data thrown out as unusable. I’m sure the high ball data wasn’t thrown out.

    I bring this up, because as other bloggers [and recent real estate websites too] stated, low inventory makes an erratic data base that is neither predictive or reliable. Taking any positive or negative data out of this slim pickings base makes it “mathematically” worse for reliable statistical trending and predictions.

  21. 21
    corndogs says:

    RE: ARDELL @ 9 – Actually, you might notice that as the prices of housing starting going down the prices became more seasonally variable. that’s consistent with a model having a steady and significant flow of distressed property and seasonally variable non-distressed. In a normal market (according to Case Shiller) Spring bounce is an increase in sale activity not price. If you believe foreclosures will continue to decrease you should ignore the year end troughs because the peaks are more representative of where the non-distressed market is headed.

  22. 22

    By whatsmyname @ 19:

    By Jonness @ 13:

    For the answers to today’s questions, we must look to the macro data and ask ourselves, what problems have actually been addressed and resolved, and what will sustain growth in our economy over the next five years?

    I agree that macro economic developments will have in impact on real estate prices around the country and world, but I suggest that you too hit the select all button on the Case Schiller raw data. You will see a substantial divergence of results based on metro location alone, (+80% for DC to -30% for Detroit) for the time period Tim shows. Within each of these markets there is another wide fan of results based upon micro location and other market factors. As imprecise as this data is, it shows that location matters.

    Yes, location does matter, but you can have Tsunami-like economic events that affect all the markets, as occurred in 2008. Thus, rather than worrying about the types of things Jonness has been focusing on, I’d worry more about what might happen in a handful of European countries, and then spread.

    That’s why I don’t really think much of looking at this C-S and other similar data to try to determine the future. It only shows the past, but people like to pretend it does more. Nothing in that data indicates whether or not Spain, Italy or Greece will default. Nothing in that data indicates whether we’re going to get an oil shock from actions by or against Iran. If you’re looking for a risk free time to buy a house, it’s not going to happen, just like there’s not going to be a risk free time to buy stocks.

  23. 23

    By sofwarenginer @ 20:

    What Would Help

    If the statistical base included all sales, with no low ball data thrown out as unusable. I’m sure the high ball data wasn’t thrown out.

    I bring this up, because as other bloggers [and recent real estate websites too] stated, low inventory makes an erratic data base that is neither predictive or reliable. Taking any positive or negative data out of this slim pickings base makes it “mathematically” worse for reliable statistical trending and predictions.

    I don’t know why you don’t think high data is not thrown out. Huge assumption without any basis for support, IMHO. Flipped houses almost certainly get thrown out.

    As to the low end though, you need to deal in some way with the non-arms length transaction. IMHO the best way to do that is to just look at listed properties. Most people don’t pay 6% to agents to sell to their kid.

  24. 24
    apartment boy says:

    I’m wondering what AC/DC has to say about it.

  25. 25
    ARDELL says:

    ” Despite some further signs of improvement, the housing sector remains depressed. ” Quote from today’s FOMC statement:

    http://www.marketwatch.com/story/text-of-fomc-statement-2012-08-01?mod=MKTW_ALL&link=sfmw

  26. 26
    ARDELL says:

    RE: corndogs @ 21

    There are much better ways to determine “where the non-distressed market is headed” than to ignore relevant data like year end troughs. Better to get more data, and separate it into distressed vs non-distressed IF you are looking for non-distressed trends, than to totally ignore relevant portions of the data in their entirety.

    I don’t generally need to separate distressed from non-distressed properties in the areas where I work, as distressed property sales don’t usually run amock and skew the data significantly. Not in single family home vs condo markets anyway.

  27. 27

    […] have been seeing reports about increasing real estate sales  and even increasing prices  for a few months now. The real estate market in Leavenworth has slowly but surely been improving […]

  28. 28
    Bob Appleyard says:

    RE: Kary L. Krismer @ 1
    One of the strengths of the Case Shiller HPI, unlike others, is that it is derived from repeat sales of the same unit, precluding the mix distortion of other indexes. A detailed description of the methodology is available on their website.

  29. 29

    RE: Bob Appleyard @ 28 – I’m familiar with their methodology. That does not mean they are not affected by the mix. REOs and short sale properties sell for less than normal listings. To the extend C-S includes them in their pairs, that will affect the results.

    I will again point out that the C-S tri-county number and the NWMLS King County SFR median are very highly correlated. If C-S wasn’t affected by mix, that wouldn’t be the case.

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