King County Median Price: Nominal and Real

Median Price May Pass Inflation-Adjusted Peak This Year

As promised, I’ve updated my chart of nominal and real (inflation-adjusted) King County median single-family home prices with data through April.

King County Median Price: Nominal and Real

When adjusting into 2015 dollars, the median price peaked at $527,607 in July 2007. April 2015’s median price of $480,000 comes in about 9 percent below that level, and is roughly comparable to where prices were in May 2006.

Last year home prices increased 8.7 percent between April and their 2014 high point in July. If we see another similar increase this year we’ll come just shy of the inflation-adjusted price peak in 2015, hitting about $522,000 in July.

In other words, any way you look at it, home prices are really high right now.

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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
    Mike says:

    Inflation adjusted payments would be interesting to look at. A lot of people were stuck paying mortgages that were hundreds if not thousands of dollars a month more than at current prices/rates.

    The peak bubble payment on my house with 20% down would have 50% higher if mortgaged in 2007. Even now after 3 years of appreciation surpassing the last peak the payment would be few hundred less than in 2007.

  2. 2
    The Tim says:

    RE: Mike @ – Good call. I will see what I can put together on this.

  3. 3
    Ryan says:

    It would also be interesting to see a rent vs payment chart though I imagine creating averages for that is a lot more work with all of the variables.

  4. 4
    Shoeguy says:

    I would also like to see the chart compared to inflation adjusted Median Incomes as well.

  5. 5
    ESS says:

    To quote Tim in this article

    “In other words, any way you look at it, home prices are really high right now”.

    And liable to go higher if the strong demand for a limited product continues. I wonder how useful it is to compare this market to the one in 2007. I would guess that the increase of companies offering high paying jobs, domestic and foreign investors buying houses, as well as newcomers pouring into the area has dramatically changed the real estate landscape and thus the equation from 2007. It would be interesting to include those factors to a comparison to what was going on then and now.

  6. 6
    Mike says:

    By Shoeguy @ :

    I would also like to see the chart compared to inflation adjusted Median Incomes as well.

    If we’re comparing to 2007, you’d have to use a figure like “stated median income” vs actual median income to identify the key change in buyer mix between the two periods. Back then a significant portion of mortgages weren’t made with the expectation that people would be using income to make the monthly payment.

    Doing a comparison with 20% down conventional will better show how unaffordable houses were back then, although the number of buyers putting money down and using fixed rate conventional mortgages was a minority in 2007. Most were using some kind of hybrid/exotic loan that delayed paying either principal or interest – or both.

  7. 7

    RE: Ryan @

    I’d Add Ryan

    Your renters are coming from two groups now; those top 10% Seattle incomes that are disgusted with this market and want to rent; a few of those I suppose….but also, the lion’s share of the tenants are average Joes making like $10.92/hr and 28 hour weeks with no health benefits….the forgotten Seattle Millenials. These $2000+ rent in Seattle, one size fits all is a ludicrous joke….

    They can get degrees and live with their mom’s and dad’s afterwards forever….what do you think I grabbed up a $26K repo in Kansas City for my Millennial daughter? I don’t like sharing my man pad with her forever. I’m retiring this year. I took the rest of her college funding and bought her a house.

  8. 8
    Cap'n says:

    But what will the future look like?

    http://seattle2035.publicmeeting.info/

  9. 9
    sleepless says:

    The last time I checked we were still at 0% interest rates policy…

  10. 10
    Walt says:

    The Tim, great website! I’ve been following for a few weeks and am busy reading back-posts trying to learn as much as possible about the Seattle RE market. I’m local to Kansas City and want to know as much as possible about the area before committing to a move/relocation. I had been watching listing prices for months but had no idea what was going on with bidding wars and sale prices until coming here.

    Have you thought of doing any posts similar to the one above for the surrounding counties, maybe Kitsap or Snohomish? Coming from the KC area (and being a renter here) has me spooked about the market in Seattle. Hell, even West Seattle looks comparatively frightening. I’m curious if the chaos wanes outside of King County.

  11. 11
    ESS says:

    Another factor to ponder when comparing this market to others in the past is the percentage of all cash deals for housing. Regardless of what prices will look like in the future, and all cash deal for a house isn’t going to be on any foreclosure lists. Yes, the all cash investor is going to lose money if the prices go down, but he or she will sell rather than just walk away. So in the next downturn, we may not see the plethora of foreclosures that hit the market as we saw in previous bear markets. Will that prevent a steep decline in prices in the next downturn? Don’t know – but it will be interesting to observe.

  12. 12
    Mike says:

    RE: ESS @ – Probably not in the core Seattle and Bellevue neighborhoods, but the outlying areas are much weaker and will be susceptible to a foreclosure flood again if there’s a significant price correction.

    One of the lingering effects of the last downturn are neighborhoods that didn’t fully recover. These now tend to be the areas with less competitive offers where marginal buyers end up buying. Just today I found a house in Renton that was purchased for $360K in 2005. According to the latest NTS it was a re-default on a modification that rolled back-payments in. Current principal balance is over $600K and there’s another $20K in back payments on top of that. Current market price is about what they paid 10 years ago, so even in this hot market they’re a quarter mil under water.

  13. 13
    whatsmyname says:

    By softwarengineer @ :

    RE: Ryan @

    ….what do you think I grabbed up a $26K repo in Kansas City for my Millennial daughter? I don’t like sharing my man pad with her forever.

    eww.

  14. 14
    Walt says:

    By softwarengineer @ :

    RE: Ryan @
    They can get degrees and live with their mom’s and dad’s afterwards forever….what do you think I grabbed up a $26K repo in Kansas City for my Millennial daughter? I don’t like sharing my man pad with her forever. I’m retiring this year. I took the rest of her college funding and bought her a house.

    I’d be interested where in KC that house is and when it was bought. Things are less expensive here, but not that inexpensive. Are you sure you don’t have Kansas City and Detroit confused?

  15. 15
    GoHawks says:

    RE: The Tim @ – This would be interesting to see as mortgage rates at the peak were 6% vs 4% today.

  16. 16
    Blake says:

    Ominous….
    House Flippers Are Back Together With Wall St. What Could Possibly Go Wrong?http://www.bloomberg.com/news/articles/2015-05-08/hard-money-comes-easy-as-wall-street-funds-home-flippers

  17. 17

    RE: Walt @

    Its in a Residential Neighborhood, where selling prices are like $60K for small houses on 1/2 acre lots. The assessed values are down from $59K to $52K on my property tax record. The homes were built in 1952….the insurance covers $100K for the dwelling though. I got mine foreclosed.

  18. 18

    RE: softwarengineer @

    Here’s a better map on Kansas City Prices

    http://www.trulia.com/real_estate/Kansas_City-Missouri/market-trends/

    You’ll see even the central city homes are in the $125-200K range and the suburbs sport $25-70K prices.

  19. 19

    RE: Walt @
    Are you Sure You Really Came from Kansas City?

    LOL

  20. 20

    Kansas City Has No Jobs

    But its worse in the Seattle area (U3 unemployment that is).

    This blogger said it all for me:

    “…Grand Rapids unemployment rate, 4.3%, household income $52,485.
    LA unemployment rate 7.7%
    Miami unemployment rate 7.7%, household income $29,962.
    I think I will put up with cold weather and have a good paying job, and a beautiful home….”

  21. 21
    Jimmy says:

    Ok, I am now seeing builders raising their prices in the Sammamish area by 7%/month this spring. As an example, a William Buchan development we’ve been following has raised their prices from $1,030,000 in February to $1,295,000 in May for the exact same house. I get there is a shortage of inventory, but something about this market seems very off. Is it the Chinese cash buyers? Low Interest Rates? High Stock Valuations for DATA, AMZN, MSFT? Unless there is some sustainable logic for these increases, this feels a lot like 2007 to me. What am I missing here?

  22. 22
    Blurtman says:

    RE: Jimmy @ – My dog was walking me by this Sam Amish house yesterday, which was receiving a lot of traffic from frenetic home seekers. It is on a bit of land, and on a cul de sac off a quite road. I am starting to believe in this Bublé thing.

    http://www.zillow.com/homes/for_sale/fsba,fsbo,new,cmsn_lt/house_type/48715592_zpid/2-_beds/700000-850000_price/2580-3133_mp/days_sort/47.610295,-122.053573,47.608357,-122.05759_rect/17_zm/0_mmm/?view=map

  23. 23
    Blurtman says:

    By Jimmy @ :

    Ok, I am now seeing builders raising their prices in the Sammamish area by 7%/month this spring. As an example, a William Buchan development we’ve been following has raised their prices from $1,030,000 in February to $1,295,000 in May for the exact same house. I get there is a shortage of inventory, but something about this market seems very off. Is it the Chinese cash buyers? Low Interest Rates? High Stock Valuations for DATA, AMZN, MSFT? Unless there is some sustainable logic for these increases, this feels a lot like 2007 to me. What am I missing here?

    This is a sensitive topic for some, but there are a lot of Chinese and also Indian folks touring the new homes in Sammamish. In so far as it may be an indication of market dynamics, I think this is an interesting observation.

  24. 24
    redmondjp says:

    RE: Blurtman @ – Ditto for the Redmond area.

    It’s a sea-change cultural shift. Last night I caught up with my Russian neighbor, who I found out owns THREE houses here (one in Bothell, and two $900K-1M homes just up the street from me, one of which he will be putting up for sale this week). He’s gotta be doing something right, financially speaking . . .

  25. 25
    whatsmyname says:

    RE: redmondjp @ – Probably identity theft.

  26. 26
    Mike says:

    RE: Blurtman @ – Bargain seekers priced out of Seattle would find a property like that a relative steal. IF you could find a comparable house in Seattle it would cost at least double. Even if it were on a standard city lot it would be hundreds of thousands more if it were closer in.

  27. 27
    David B. says:

    RE: Mike @ – It’s such a different house in such different surroundings that I doubt it would much appeal to someone interested in in-city living.

  28. 28
    David B. says:

    RE: softwarengineer @ – “But its worse in the Seattle area (U3 unemployment that is).”

    Right, but that’s just an overall statistic, and buyers are individuals, not overall statistics. If your skill set is in the high-tech field, there’s plenty of good jobs to be had in Seattle. In fact, Seattle is a much better place, career-wise, for most (most, not all, again we’re talking about individuals here) high-tech professionals than is Grand Rapids.

    I wouldn’t pick the Midwest myself but there’s any number of places in the Pacific Northwest I’d rather be living than the Seattle metro area if jobs weren’t a factor. Almost all of them have significantly cheaper housing than Seattle does. Yet the job prospects there are so limiting it’s not worth living there.

    However, the job situation here is still good enough that it’s worth it for me to live here rather than the San Francisco Bay Area (even more career opportunities, and an even more insane housing market). So here I am.

  29. 29
    Walt says:

    RE: softwarengineer @

    You are correct that you can get homes for well under $200k and be in the city core–if you are willing to define that based on proximity to downtown, regardless of what your neighborhood offers. North KC and KC Kansas have good value (large lots, 20-30 minutes to downtown) but I liken then to West Seattle. Have friends that live elsewhere in town? Not anymore, you aren’t visiting them and they aren’t visiting you! Few people are willing to put up with the 30+ minute drive from central KC to the North, especially with the limited river crossings, resturant and shopping options. For the best value you also have to be OK with living in a split level house, which prevails here due to our slopping lots. Most people are, they just don’t suit me.

    Call me your typical millennial: I value a short commute (I work in south downtown) and refute the ticky-tacky. The neighborhoods I’m interested in are older, more centrally located, and have character.

    My home buying plans in KC are on hold while I wait to hear back about a transfer to Seattle. Though if I make a move it looks like home buying is on hold indefinitely–YIKES!

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