Case-Shiller: No Winter Price Dip For You!

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

Up 0.2 percent December to January
Up 10.7 percent YOY.
Down 2.8 percent from the July 2007 peak

Over the same period in 2014-2015 prices were down 0.5 percent month-over-month and year-over-year prices were up 6.8 percent.

The Seattle area’s month-over-month home price change was positive again in January. Unlike the last few years, home prices did not dip the last few months of the year, but instead the gains just slowed down. This is similar to what happened in 2005 and 2006, although the affect was even stronger then. Meanwhile, the year-over-year price change in January jumped back up into double digits for the first time since April 2014, as well.

In summary: It is still a terrible market to be a home buyer in.

Here’s a Tableau Public interactive graph of the year-over-year change for all twenty Case-Shiller-tracked cities. Check and un-check the boxes on the right to modify which cities are showing:

Seattle’s rank for month-over-month changes was flat at #8 January.

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 January, just one of the twenty Case-Shiller-tracked cities gained more year-over-year than Seattle (two fewer than in December):

  • Portland at +11.8%

Clearly Washington and Oregon have an economy that is literally the envy of other states.

Denver, Portland, and Dallas both hit new all-time highs in January.

Eighteen cities gained less than Seattle as of January: San Francisco, Denver, Dallas, Tampa, Detroit, Los Angeles, San Diego, Miami, Phoenix, Las Vegas, Atlanta, Charlotte, Minneapolis, Boston, Cleveland, New York, Washington, and Chicago.

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

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 102 months since the price peak in Seattle prices are down 2.8 percent.

Lastly, let’s see what month in the past Seattle’s current prices most compare to. As of January 2016, Seattle prices are still approximately where they were in March 2007.

Case-Shiller: Seattle Home Price Index

Check back tomorrow for our monthly look at Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 2016-03-28)

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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.

34 comments:

  1. 1
    SFraz says:

    Portland, Seattle, and San Francisco home prices are now above 2006/2007 bubble highs…
    “…it appears the Chinese buyers are migrating south from Canada with Portland, Seattle, and San Francisco reported the highest year-over-year gains among the 20 cities with another month of double digit annual price increases. Home prices continue to climb at more than twice the rate of inflation amid a supply shortage as West Coast property markets become “Vancouvered.””
    http://www.zerohedge.com/news/2016-03-29/case-shiller-home-prices-jump-driven-west-coast-chinese-buyers

  2. 2
    TJ98370 says:

    RE: SFraz @ 1

    Interesting article. It wonder what percentage of the “migrating” Chinese buyers are speculator investors planning to rent out their newly purchased properties, compared to how many are actually going to live in those homes.

  3. 3
    TJ98370 says:

    RE: SFraz @ 1

    I can’t help but wonder if the spike in “migrating” Chinese buyers is somewhat influenced by Trump’s anti-Chinese rhetoric? Maybe they are thinking – Better buy now while we still can?

  4. 4
    eastsidebuyer says:

    Tim,

    I am buyer who lost on bidding war. The winning bid is close to 15% above asking price (asking price is same as Redfin and my agent’s estimation of the house). The house price is above median price for east side. I was told by my agent that lot of people can afford these houses.

    I was wondering if you did any analysis on median prices and affordability for King county.

  5. 5
    MoreMortgagesThanAStripper says:

    STOP WITH THE CHINESE BUYERS ALREADY. They are just one small piece of the puzzle here. They aren’t single-handedly destroyed your cities.

    We are adding lots of high-paying jobs, we have geographically limited housing, very limited new housing creation is able to actually happen, and a have a very desirable environment to live.

    Yes, foreign money (both investment and relocation) impacts the housing market, but that is a small portion compared to the impact of all the high-paying jobs.

    Bottom line: we’ve got a very healthy economy that is being driven by MANY factors.

  6. 6
    GoHawks says:

    RE: eastsidebuyer @ 4 – I believe affordability is still a ways below 2006-2007 highs due to rates being at 6% vs 3.75% now.

  7. 7
    greg says:

    By MoreMortgagesThanAStripper @ 5:

    STOP WITH THE CHINESE BUYERS ALREADY. They are just one small piece of the puzzle here. They aren’t single-handedly destroyed your cities.

    We are adding lots of high-paying jobs, we have geographically limited housing, very limited new housing creation is able to actually happen, and a have a very desirable environment to live.

    Yes, foreign money (both investment and relocation) impacts the housing market, but that is a small portion compared to the impact of all the high-paying jobs.

    Bottom line: we’ve got a very healthy economy that is being driven by MANY factors.

    I see a much larger number of non Indian Asian buyers than I have ever seen before. I have zero objection to them buying homes here but to pretend it is not happening is just nonsense.

    Of course they are not the only factor , but they are playing a real role in pushing up prices. Along with new jobs, along with cheap money and along with silly zoning polices.

    Maybe we could help locals by creating a tax exemption for long term owner occupiers. It is not popular with investor/landlords etc but it does provide some advantage to locals. the rules need to be crafted to avoid people pretending to live in a home and should be in the form of US tax credits etc , not cash.

    Perhaps first time buyer and “mover up” tax exemptions. The tax discount is tied to living in the home for a period of years after the purchase. It can be done a number of ways but stamp duty is popular or even in the form of reduced property taxes on the first 1M that become payable if the home is sold in the first 3-5 years…

    Another that works pretty well in the EU is Joint ownership between the state and buyer. a 50% /50% split with the state taking 50% of profit on any future sale, it is a long term investment win for the state and it can help lower income folk get a start. The buyer can even buy out the state after a fixed period of time for market rate…

    Tax incentives for builders who sell affordable homes, and easy access to funding to assist them with scale.

    It merely requires the state to understand they have a role in fixing the problem that they are partly responsible for in the first place
    And before anyone starts shouting about communism and free markets, just remember we dont have free markets in the USA, that is just rubbish. Many of the markets consumers must use are highly protected cartels, monopolies, guilds etc. Virtually all services to our homes are state protected, many services we purchase are controlled by guilds cleverly disguised as “licensing” for consumer “protection”. You cant swing a cat in the USA without running into a protected market.

    The are a whole bunch of things that can be done to make it easier for owner occupiers it merely requires the will.

  8. 8
    Blurtman says:

    I periodically look at homes in Sammamish on Zillow, and you can usually find a few sub-700k homes on the market, and choices below $1 million. Now all the homes listed are $1.1-1.3 million. And the new homes under development will be similarly priced or perhaps a bit higher. It’s a runaway train! (Disclaimer: Long Sammamish RE.)

  9. 9
    The Tim says:

    By eastsidebuyer @ 4:

    I was wondering if you did any analysis on median prices and affordability for King county.

    It has been a while since I updated the affordability index data. I will look at that soon. Unfortunately I think a lot of what is driving the current market is not your typical buyers that purchase homes with incomes, but rather people buying with cash obtained from a variety of sources…

  10. 10
    ESS says:

    RE: greg @ 7 – STOP WITH THE CHINESE BUYERS ALREADY. They are just one small piece of the puzzle here. They aren’t single-handedly destroyed your cities.

    Personally I think all cash buyers – Chinese or otherwise are a good thing for the real estate market. If nothing else, they will provide a shock absorber in future market price declines. All cash buyers as many Chinese buyers are, are not going to abandon their property if the “bubble” bursts and there is a ten to thirty percent decline in prices, The more dangerous situation is to have a city or region where most or all the home owners have purchased with a minimal down payment, and have no incentive to remain if they have no equity in the house due to a falling of prices. The problem in the great recession was not only falling prices, but large numbers of houses on the market due to repossession from owners who had no skin in the game.

  11. 11
    TJ98370 says:

    .
    Robert Shiller: We’re not in a housing bubble… yet
    .
    http://finance.yahoo.com/news/shiller–we-re-not-a-housing-bubble–yet-164129807.html

  12. 12
    Weasel says:

    The last bubble was shoddy loans, this time around its tech. Everyone calling bubble is comparing apples to oranges.

  13. 13
    David B. says:

    By greg @ 7:

    And before anyone starts shouting about communism and free markets, just remember we dont have free markets in the USA, that is just rubbish.

    Particularly in housing, which is subject to planning and zoning regulations and for which there is massive government intervention in the mortgage industry. (Most countries don’t even have 30-year fixed-rate mortgages; that they exist in the USA is due to government intervention to facilitate the existence of such financing.)

  14. 14
    Mellon says:

    The Tim nailed it at #9. What you’re seeing is tech cash with nowhere else to go. The $150k tech salaries alone for the average bear are not be enough to afford $1M+ homes, but after a few job hops and cashing in your equity all of a sudden you can put $500k+ down and afford these kind of prices.

    Stock is cheap for the tech companies, they print it so fast it would make a prepper explode if they weren’t railing against the fed all day. Get it while the getting is good and put it into a hard asset while you can. Not too different from the Chinese criminals, I mean businessmen.

    Someday there will be a rude awakening… and someday after that there will be another bubble.

  15. 15
    kenmorem says:

    any chart that shows that prices are still below the peak of the last bubble are inherently flawed. yes, i know, it’s location specific, but c’mon. does anyone know a single person who’s house wouldn’t sell for more than they bought it for at the peak in 2007?

  16. 16
    wreckingbull says:

    RE: kenmorem @ 15 – If you read the details behind the CSI, it makes a little more sense. I think it is easy to forget how bubbly the outlying areas of the tri-county area got in 2007. These areas are quite strong again today, but nothing like the 5-mortgage-stripper-and-also-real-estate-agent days of 2007. This is likely the main reasons behind your perception.

    http://us.spindices.com/documents/methodologies/methodology-sp-cs-home-price-indices.pdf

  17. 17
    Eastsider says:

    Foreign buyers do push up property prices. In the past few years, a few cities/countries in Asia, e.g. Singapore/Sydney, have implemented various measures on foreign purchases to minimize the (speculative) impact on local property prices. These methods have proven effective in cooling the property bubbles.

    Seattle and Eastside do not have enough housing stock to accommodate the influx of residents and the growth in population. Perhaps we should consider introducing a 3% excise tax on out-of-state purchases of SFH and condo in Seattle/Eastside.

    I simply don’t see many tech workers, even with 6-figure income, able to afford million dollar houses. Yet nearly every new SFH in close-in neighborhoods in Seattle, Bellevue, Kirkland, Redmond are priced in the millions. This is getting ridiculous.

  18. 18
    TJ98370 says:

    By MoreMortgagesThanAStripper @ 5:

    STOP WITH THE CHINESE BUYERS ALREADY. They are just one small piece of the puzzle here. They aren’t single-handedly destroyed your cities.

    We are adding lots of high-paying jobs, we have geographically limited housing, very limited new housing creation is able to actually happen, and a have a very desirable environment to live.

    Yes, foreign money (both investment and relocation) impacts the housing market, but that is a small portion compared to the impact of all the high-paying jobs.

    Bottom line: we’ve got a very healthy economy that is being driven by MANY factors.

    I do not agree that tech jobs expansion / local economy can explain the recent appreciation of housing prices in Seattle.

    U.S. Real Estate to Draw More Foreigners in 2016, Survey Says

    http://www.bloomberg.com/news/articles/2016-01-04/u-s-real-estate-to-draw-more-foreigners-in-2016-survey-says

    Most foreign investors expect to put more money into U.S. property this year than they did in 2015, ….
    .
    ………China’s economic slowdown, Brazil’s recession and Europe’s immigration crisis underscored for international investors that “the U.S., at the moment, really is the safest place for them to go…..”
    .
    ……Investors from Canada, Asia, Europe and Australia bought stakes in office towers, warehouses, apartment buildings, shopping malls and hotels in search of relatively higher yields……

    .
    I think we can safely bet that smaller foreign investors are buying SFH’s and that is a major factor in what is driving the price appreciation we have been experiencing in Seattle, Portland, and San Francisco the last few months.

  19. 19
    Macro Investor says:

    This just proves it is totally possible for everyone to be rich in a great city like Seattle. I mean, just look at all those mountains and the water. How can any house be worth less than $1 million? And nobody should ever sell, because in 5 years houses will be worth 3 million.

    Everybody the world over wants to live in Seattle. Tech companies are just racing to stake their claim. But there’s no more land and the government is holding back development. There is no bubble. Only people who are too lazy to pick up an easy million or 2, just for being alive.

    To ensure that everyone gets a fair deal, minimum wages should rise by $5 a year, until everyone makes 100k. Anyone who doesn’t agree with that is a greedy racist, who is spitting in the face of the decent folks who serve them every day.

  20. 20
    Justme says:

    By TJ98370 @ 11:

    .
    Robert Shiller: We’re not in a housing bubble… yet
    .
    http://finance.yahoo.com/news/shiller–we-re-not-a-housing-bubble–yet-164129807.html

    Shiller is making his (nationwide) statement based on inflation-adjusting the price index, which brings the curve downward. He completely ignores that consumer price inflation does not match wage inflation. Wage inflation has been paltry if not zero for the bottom 90% (or 99%) of the population.

  21. 21
    Blurtman says:

    RE: Macro Investor @ 19 – Blue pill.

  22. 22
    StupidLifeDecisions says:

    By Macro Investor @ 19:

    This just proves it is totally possible for everyone to be rich in a great city like Seattle. I mean, just look at all those mountains and the water. How can any house be worth less than $1 million? And nobody should ever sell, because in 5 years houses will be worth 3 million.

    Everybody the world over wants to live in Seattle. Tech companies are just racing to stake their claim. But there’s no more land and the government is holding back development. There is no bubble. Only people who are too lazy to pick up an easy million or 2, just for being alive.

    To ensure that everyone gets a fair deal, minimum wages should rise by $5 a year, until everyone makes 100k. Anyone who doesn’t agree with that is a greedy racist, who is spitting in the face of the decent folks who serve them every day.

    Agreed MacroInvestor, truer words never typed. Those of us who chose the irresponsible education/career paths of accounting, finance, medicine, law over IT deserve to be paying 50% or more of our take home in pay in rent for making such careless and foolish life decisions.

  23. 23
    GoHawks says:

    Interest rates are at or near 2016 lows, the stock market is back in the green for the year…….two of the big “this will hurt the market in 2016” bear calls have again not come to fruition. Maybe in 2017.

  24. 24

    By kenmorem @ 15:

    any chart that shows that prices are still below the peak of the last bubble are inherently flawed. yes, i know, it’s location specific, but c’mon. does anyone know a single person who’s house wouldn’t sell for more than they bought it for at the peak in 2007?

    Remember this is three county data.

  25. 25

    By Weasel @ 12:

    The last bubble was shoddy loans, this time around its tech. Everyone calling bubble is comparing apples to oranges.

    It’s always a mistake to assume the same thing will happen that happened last time. Just comparing the local market crash of 2008 to the one in the early 80s, the condo market reacted totally different the second time.

    But as long as you bring up those two issues, the loan issue was more of a national issue, or more precisely an issue in a hand full of largely populated states. Assuming the tech bubble bursts, that could be more of a local issue, or at least one with more direct impact.

  26. 26
    Erik says:

    RE: wreckingbull @ 16
    Which Charles kindleberger book did you read?

  27. 27
    rducky26 says:

    RE: ESS @ 10
    The question is whether the all-cash buyers are truly coming to the table with their own money. There is nothing to stop foreign nationals from quietly running their own investment brokerage. The US analogy is “hard money”.

  28. 28

    RE: rducky26 @ 27 – Cash buyers can get funds though loans against other properties–e.g. a HELOC.

  29. 29
    Funske says:

    I think you’re underestimating the purchasing power of tech workers by assuming that they are single or the sole earners for their family. $1MM homes aren’t unreasonable for a tech/professional couple. A couple earning a combined $250-300k can afford a $1MM home.

  30. 30
    rducky26 says:

    RE: Kary L. Krismer @ 28 – My statement is in reference to ESS’s comment that all-cash buyers are a lower risk, b/c they have more skin in the game. The general assumption is that all-cash buyers have high equity and will be less likely to default, unlike buyers with minimal equity.

    However my experience is that *foreign* all-cash buyers, while choosing to title in an individual’s name, may actually represent investors. Not in the sense that large banks do, but the funds may be sourced from a couple dozen or fewer “investors”. In those cases, the person on title may have 0% equity according to the terms of the handshake agreement settled in their home country. It really depends on whether the individuals involved choose to support/respect local laws.

  31. 31
    GoHawks says:

    RE: Funske @ 29 – yes, if they can come up with the 20-25% down payment, a $4,000-$4,500 payment is not “a lot” for them.

  32. 32
    Chandler says:

    RE: TJ98370 @ 3 – You are over-thinking it. The immigrants Trump claim he will reject are low income migrant workers. Who do you think are buying those high end candos Trump developed in Manhattan?

  33. 33
    Chandler says:

    RE: GoHawks @ 31 – 20k down is not a lot for tech workers. They can cash their stock.

  34. 34
    greg says:

    RE: Chandler @ 33

    20K? stick a zero on that and you would be a lot closer.

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