Case-Shiller Tiers: Low Tier Home Prices Skyrocketing

Let’s check out the three price tiers for the Seattle area, as measured by Case-Shiller. Remember, Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Note that the tiers are determined by sale volume. In other words, 1/3 of all sales fall into each tier. For more details on the tier methodologies, hit the full methodology pdf. Here are the current tier breakpoints:

  • Low Tier: < $284,068 (up 2.1%)
  • Mid Tier: $284,068 – $452,281
  • Hi Tier: > $452,281 (up 1.7%)

First up is the straight graph of the index from January 2000 through July 2013.

Case-Shiller Tiered Index - Seattle

Here’s a zoom-in, showing just the last year:

Case-Shiller Tiered Index - Seattle

All three tiers posted gains again in July, with the low tier once again gaining the by far the most in the month. Between June and July, the low tier rose 4.0%, the middle tier was up 1.8%, and the high tier gained 1.6%.

Here’s a chart of the year-over-year change in the index from January 2003 through July 2013.

Case-Shiller HPI - YOY Change in Seattle Tiers

The low tier was also the biggest gainer yet again in year-over-year growth from a year ago, hitting a ridiculously unsustainable level of 20.6% in July. None of the tiers ever hit 20% or more year-over-year growth, even during the height of the housing bubble. If this keeps up we’re definitely being set up for another crash, but I suspect things will level off very soon with the recent increases we’ve seen in interest rates and inventory. Here’s where the tiers sit YOY as of July – Low: +20.6%, Med: +15.2%, Hi: +11.0%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers

It seems likely that the low tier is rising so much quicker than the other tiers because it fell so much further. Even with the recent dramatic gains, the low tier is still the furthest from its peak pricing. Current standing is 27.7% off peak for the low tier, 19.0% off peak for the middle tier, and 13.8% off peak for the high tier.

(Home Price Indices, Standard & Poor’s, 09.24.2013)

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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.


  1. 1

    I Agree With Your Concluding Paragraph

    Albeit I’d add another possible reason for the allure of low tier….the middle/high tier buyers are downsizing, i.e., Baby Boomers in the market.

  2. 2
    corndogs says:

    “All three tiers posted gains again in July, with the low tier once again gaining the by far the most in the month.”

    Once again Corndogs prediction made over a year ago continues to play out in precise fashion. Lower tier gaining the most and all tiers moving to coalesce around Case Shiller 160. What is the aggregate value now? Oh yeah, I see it’s 160. Isn’t that what I said?… Oh yeah it is.

    What did I predict next? I predicted that the index would start to track with inflation after 160 and the lower tier would catch up by mid 2014. Of course there will be some seasonal variation. August naturally will overshoot 160 and looks like September will too. For the prediction to be 100% correct we would probably need a tick up in interest rates so we can see prices level off or drop a bit this Winter. Oh… we already had a tick up in interest rates? Oh I guess we did. Well, sh!t, this was easier than I thought.

  3. 3
    Erik says:

    RE: corndogs @ 2
    Good job. You dominated Matthew.

    Interest rates seem to be slowly going down though. The overnight average is 4.32% today down from 4.52%. If this trend continues, I see prices way overshooting your prediction.

  4. 4
    Matthew says:

    How has anyone dominated anyone when I said that July/Aug would be the peak? Chill out Trollboy,

    The air apparent for predication supremacy will not be evident in CS numbers for yet a few months. Slow your roll.

  5. 5
    corndogs says:

    RE: Matthew @ 4 – “The air apparent”

    Just for future reference the term is “HEIR apparent” dumba$$! Corndog owns you!

  6. 6
    Scotsman says:

    I’m betting interest rates have peaked. The Feds watch the 10 year like a hawk. They can’t afford to have it go much over 3%- so it won’t. High rates will collapse this economy and bankrupt the country. Simple as that. We’re too far down this one way debt tunnel to ever turn back.

  7. 7
    Erik says:

    RE: Matthew @ 4
    Okay, most indicators would say prices will keep rising or go flat especially for low tier people like myself. If I sold July/August, I would have lost 15% profit to capital gains tax. You read my situation and you indicated I should sell anyway and take the 15% loss. It seems like that would be the wrong call and cost me about $20k in profit. Interest rates are inching down and inventory is staying flat at 4700/4800 in King County. These curves don’t instantly turn from steep increasing to steep decreasing. Additionally, the low tier can continue to increase while the high and mid tier decrease. Dumb money(low tier) generally is the last to figure it out and react which would further support the case for me not to sell my low tier home.

    Good job on calling the previous top, but I do not see this as a top. I see this as real recovery in housing prices atleast. We have hit the bottom and now prices will most likely increase slowly from here on out, which makes it a great time to get out of real estate or be a slum lord and collect sweaty renter cash for years to come.

  8. 8
    Matthew says:


    You are the heir of air.

  9. 9

    RE: Scotsman @ 6

    I Thought So Too Scotsman

    But an insolvent government with only a mere $30B chump change in cash changes all that in today’s recent news. No more QEs lowering mortgage interest rates, the fed borrowing is dead?

    “…. Treasury Secretary Jacob Lew said Wednesday the government will have exhausted its borrowing authority by Oct. 17, leaving the United States just $30 billion cash on hand to pay its bills….”–finance.html

    Its like the Salem Witch Trials, we kept heaping “Trillion dollar QE stones” on the accused by borrowing the $1T per year to buy fed treasuries to keep the interest down on our $17T debt [or go insolvent that way too]….the debt rocks may have apparently killed the accused witch on October 17, 2013; without a deficit enlargement stop gap measure in place.

    Stay tuned to the news; the worst case scenario would destroy our government and of course Seattle’s economy too.

  10. 10
    ARDELL says:

    Since Case Schiller only uses “matched pairs”, meaning the house has to sell twice in the period to make it to the Case Schiller stats, it’s likely that more low tier homes were substantially improved between those two sales than the mid or high tier homes. That would account for a large part of the expanded “appreciation” factor.

  11. 11
    Erik says:

    RE: ARDELL @ 10
    “Price Anomalies. If there is a large change in the prices of a sales pair relative to the statistical distribution of all price changes in the area, then it is possible that the home was remodeled, rebuilt or neglected in some manner during the period from the first sale to the second sale. Or, if there were no physical changes to the property, there may have been a recording error in one of the sale prices, or an excessive price change caused by idiosyncratic, non-market factors. Since the indices seek to measure homes of constant quality, the methodology will apply smaller weights to homes that appear to have changed in quality or sales that are otherwise not representative of market price trends.”

    The case-shiller price index tries to mitigate the risk by assigning lower weight to remodels. Low tier was going to catch up sometime, right? It doesn’t surprise me that the low tier gained so much. It was our turn.

  12. 12
    ARDELL says:

    RE: Erik @ 11

    …and yet if you sell, you would have to agree that your place would exactly fit what I am saying. It is not the same place you bought…by any means. You changed it. On the other hand the home I am unstaging tomorrow preparing for closing was owned by the current owner for 17 years. I don’t think it will even be counted, since it has no “matched pair” within the timeframe.

    People need to remember that CS only counts some homes and not others. Lots of sales I have seen in the last 18 to 24 months were homes where the seller owned the home MUCH longer than the CS “matched pair” time frame. They are not counted at all. Makes sense that “starter homes” will turn over more frequently and in greatly improved condition. Not a flip. Just improved from the time of purchase to time of sale over a period of 6 mos to 5 years.

    Many people improve a place they bought cheap. Few people want to improve a home they paid a lot of money for at time of purchase. This has been even more true since end of 2007. People are less willing to “throw good money after bad”.

  13. 13
    corndogs says:

    RE: Matthew @ 8 – “You are the heir of air”

    As with all those vanquished by Corngod on SeattleBubble, your retort has become infinitesimally short mitigating the risk of further embarrassment. As the Alpha and Omega Corndog knew this would be at least one inevitable ending. But don’t become a slave to common sense, Maddy! Speak your mind! Where’s your anger? There’s nothing wrong with being angry AND foolish. Look at Losh! He will not easily return to his burrow of solace where his only choice is to peer outward with silent anxiety. Lo, he has risen above this! You have all the defense mechanisms that he has. Engage your denial and repress those doubts about yourself, lash out with certainty! So you meet the end of a steel-toed boot. Is that so bad? At least you’re not alone. Otherwise, your brief foray into Corndogs world of sunlight has ended.

  14. 14
    3rd Generation says:

    12. ARDELL
    “People are less willing to “throw good money after bad”.

    Speaking of just that topic. In your job representing buyers and sellers of real property, how do you deal with the know-it-all/nothing boob/client that has self-remodeled ignoring acquiring appropriate permits and receiving required approvals for areas such as electrical – plumbing – structural modifications and the violation (?) or potential violation and liability as it relates to an HOA ? I imagine, for example, the buyer or lenders wouldn’t much care for a wall heater ‘upgrade’ that was illegally/improperly installed by an amateur that goes on to burn down the unit and/or the complex, even if it has been ‘looked at by an electrician’ after installation and Made in Seattle?

    Who has the duty, Who gets to defend themselves in court and Who receives the judgement for damages and court costs and fees later?

    Is your only recourse to limit your professional liability and protect the lender to market such a compromised, defective and possibly dangerous property as “Owner Remodeled” or “As Is” ?

  15. 15
    m-s says:

    RE: Matthew @ 4
    Reminds me of the old joke: What’s the difference between a prince and a papa gorilla?
    One is the Heir Apparent, the other is a hairy parent.
    To that I would add that one who flatulates loudly or aromatically makes his air apparent.

  16. 16
    Erik says:

    RE: ARDELL @ 12
    Ardell, I was just sighting the part of the CS price index that was stating how they approach remodeling. Here is how i see it in my head…
    CS_Index = .8X+.2Y, where X=homes that have not had abnormally large increase and Y is for homes that have had large increases. I see what you are saying though. I’m sure many low tier homes just get minor improvements and fall into “X” category.

    RE: 3rd Generation @ 14
    Go away 3rd Generation. I thought I ran you off already. If you are trying to take pot shots at me, all of my work has been inspected and I passed. I’m sure 2nd generation would just roll his eyes at you and send you off the the country club.

    RE: corndogs @ 13
    I really like the “Corngod” thing. Hilarious! After reading on here daily for a long time and not occasionally dropping by I have learned a lot. You know a lot more about real estate than Losh, Matthew, Wreckingbull, and 3rd Generation for sure. I think anyone that comes on here and reads the charts and comments and has half a brain can figure that out. Why those clowns get so many thumbs up really amazes me. Either they programmed something to vote multiple times, their work friends give them all thumbs up and anyone that opposes thumbs down, or they vote from various machines. It amazes me how their low value comments repeatedly get massive praise. Read the data you fools!!!!

    It is nice to see some of the people that really do know a lot about real estate back on here. For a longtime it was just garbage from low level programmers and throwback real estate agents. Scotsman, Corndogs, Ardell, Ira, please keep coming back. Your input is always appreciated.

  17. 17
    whatsmyname says:

    One thing about July CSI is that it is an average of May, June, July. So if the market was moving consistently, (and I think it was), it is really more representative of June. If you are trying to relate this to current prices, you are about three months behind. So given a consistent trend, the street equivalent CSI today is probably more like 166.

  18. 18
    Ron says:

    “The low tier was also the biggest gainer yet again in year-over-year growth from a year ago, hitting a ridiculously unsustainable level of 20.6% in July. None of the tiers ever hit 20% or more year-over-year growth, even during the height of the housing bubble.”

    If you believe there is value and momentum in this market then you believe the highs will be tested. A lot of smart money jumped in based upon this simple theory of momentum investing. Short of a recession or ‘shock’ to the system my bet is that we’ll test the highs.

    I’m with the great cornhole on this one.

  19. 19

    RE: ARDELL @ 12

    Yes Ardell

    My sister asked me if I was selling my home now that her niece and nephew moved out, and I replied, “Hades no, use the closing costs you don’t need to spend for remodeling and stay put.” No moving costs either.

    I’m all ready for the big junk truck to clean out 2/3s of my house [they separate things for the Good Will for you BTW] this weekend in one swipe. Its a big 16′ load space and I’ve already hired help to assist me…..spent evenings after work putting everything I don’t need in contractor waste bags….my son’s old room is the staging area and is full for the truck :-)

    Then the whole house interior is getting painted, then all the rugs replaced and then I order new furniture for my new god palace :-)

  20. 20
    David Losh says:

    Let’s see, corndog continues to parrot Zillow redfin, and Trulia, with that Case Shiller data, but over looks the over all economy, and where the price of housing fits into a lower wage base, and unemployment.

    Then we got mega flipper Erik talking trash.

    This is a funny little thread without a conclusion, other than people are paying way too much for crap remuddle projects.

    Thanks Ardell for pointing out another aspect of why a Real Estate Index is flawed.

    Thank God for the bears on this site.

  21. 21

    RE: David Losh @ 20

    So True David

    The bears speaking truth automatically get downthumbed by the bulls, especially when we make sense and reference technical and news data supporting our position [they usually don’t].

    I went to a co-worker’s newer expensive Puyallup home [a one hour mesmerized drive from Kent in the toolies only a GPS could find] for a party this weekend….looked around and yes, it was very nicely built, but I smelled debt, BIG DEBT [I hope I’m wrong and he had family inheritance to pay for most of it].

    I’m quite sure as that place deteriorates [they all do, especially with his 4 dogs and 3 kids] it won’t get the tender loving care cash to keep it up, how could he afford it?

  22. 22
    corndogs says:

    RE: softwarengineer @ 21RE: David Losh @ 20

    “So True David, The bears speaking truth automatically get downthumbed by the bulls, especially when we make sense and reference technical and news data supporting our position [they usually don’t].”

    Oh isn’t that precious? SWE calling Losh by his first name. It’s a bro-mance budding right before my eyes. Yeah, maybe you two can get married now and put your bank accounts together and buy a pop tart!

    As of late, you two want to pretend that the site is divided into Bears and Bulls, This is because you know eventually as prices level out or drop a bit you can claim to be right and redeem yourself while making everyone else wrong by default. The fact is, Corndog is not a Bear or a Bull, he made a precise prediction of where prices would be in the future and nailed it, he also called the bottom and purchased at the precise bottom. You two lovers have been saying the same Chicken Little story for years and you have been dead wrong, The market spiked in historic fashion, neither of you two dimwits saw it coming. To make it even more hilarious, Corndog singled you both out for ridicule from the beginning and Corndog has creatively harpooned you at will. You guys aren’t Bears, you’re dipsh!ts. The intellectual battle, if you can call it that, has came and went, and you two lost. Game, set, match.

    On second thought, you two shouldn’t get married, once you used all the clean dishes the two of you would probably starve to death.

  23. 23
    David Losh says:

    RE: corndogs @ 22

    or you and Erik should marry.

    Bulls, and Bears are stock market terms that have carried over to the general economy, as though the stock market is now a measure of our economic security.

    The Case Shiller Index wanted to piggy back onto the gains in the stock market making Real Estate a component of stocks, as it has become a basis for financial securities,

    Oops, I’m going over your head again so I’ll dumb it down a little more.

    Real Estate is about individual deals that we make. Some properties are worth owning many are not. We turned a corner in Real Estate development in the late 1990s. New construction has become much more efficient all the way around. Spot lot building, as we’ve discussed, is really very cost effective for the consumer.

    That means there are more properties in the tear down stage than there were before the building boom between 1998 and 2008. That building boom also gave us a glut of housing, and land use code changes gave us even more ability to build.

    We are selling 400K new construction units, but producing 800K per year.

    The glut continues, and will continue for as long as builders figure the profits.

    For the consumer they need to know what is or isn’t a good deal. Looking at sales charts doesn’t tell you that.

    You are reading a lot into the Real Estate sales agent hype where they need to make sales, and create excitement in the market. I just don’t see it in most houses I look at, and we are looking at houses right now because there are some good properties for sale in the middle of a lot of crap.

    So best of luck with that Erik bromance you have going on, and thanks for pointing it out to us.

  24. 24
  25. 25
    ugggh says:

    Now I know there is another property bubble about to burst. Corndogs et al lashing out frantically just like the deniers in the bubble top in mid-2007. Where is Mushugy? Corndogs?

    Sorry you feel that cold wind coming but thems is the breaks for an ill-timed “investment.”

    This market (and stocks) nothing but Fed money. When faith is lost, watch out.

    And a note: contrary to popular belief, the Fed does not control the 10-year rate and hence the 30-loan rate. They only control the overnight stuff to the banks. Traditionally, the 10-year follows the Fed lead. However, we are witnessing a disconnect of that as faith in the Fed wanes (search Richard Koo statements from last couple of days). Big trouble ahead and housing is the least of it.

    Good luck to all.

  26. 26
    Jonness says:

    By corndogs @ 5:

    RE: Matthew @ 4 – “The air apparent”

    Just for future reference the term is “HEIR apparent” dumba$$! Corndog owns you!

    Matthew’s nicknames for you are unbeatable. You might strike some heavy blows along the way, but you can’t defeat him!

  27. 27

    RE: Scotsman @ 6
    But borrowing can’t continue to infinity. At some point, the piper is going to want to get paid. Yeah, they’ll continue to borrow to not suffer any consequences themselves, but pass the buck on at some point, leave the collapse of the world to the next generation. –

  28. 28
    Jonness says:

    By Scotsman @ 6:

    I’m betting interest rates have peaked. The Feds watch the 10 year like a hawk. They can’t afford to have it go much over 3%- so it won’t. High rates will collapse this economy and bankrupt the country. Simple as that. We’re too far down this one way debt tunnel to ever turn back.

    I agree. We’re stuck in a quagmire of QE infinity.

  29. 29
    whatsmyname says:

    RE: Jonness @ 28

    Well then, it must be time to get that one year ARM – 2.63%

  30. 30
    willynilly says:

    RE: softwarengineer @ 21

    One hour from Kent to Puyallup on the weekend? DId you take the ferry?

  31. 31
    JWS says:

    RE: Blurtman @ 24

    Love this! I would give this comment 10 thumbs up if I could. The thought of softwarengineer hosting a party at his house with a dance-off in the living room is priceless. Maybe he would remove himself from the blue couch and show off his moves. I would love an invite.

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