Case-Shiller: Seattle was the only market to see price declines between June and July

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

Down less than 0.1 percent June to July
Up 12.1 percent YOY.
Up 34.7 percent from the July 2007 peak

Last year at this time prices were up 0.7 percent month-over-month and year-over-year prices were up 13.5 percent.

Each month from February through May, Seattle had the biggest month-over-month gains of all twenty Case-Shiller markets. In June the rank fell to #8, and in July it dropped all the way to the bottom at #20. However, Seattle still has the second-highest year-over-year price growth. The only metro area with higher price growth from a year earlier in July was Las Vegas at 13.7 percent.

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:


Here’s how the month-over-month price changes looked for all twenty markets:

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 metro areas.

Seattle’s year-over-year price growth is falling. From September 2016 through May 2018 our market had the largest gains, but for the last two months Las Vegas has been on top.

Eleven metro areas hit new all-time highs in July: Los Angeles, San Diego, San Francisco, Denver, Atlanta, Boston, Minneapolis, Charlotte, Cleveland, Portland, and Dallas.

Here’s the interactive chart of the raw HPI for all twenty metro areas through July.


Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve metro areas 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 132 months since the 2007 price peak in Seattle prices are up 34.7 percent.

Lastly, let’s see how Seattle’s current prices compare to the previous bubble inflation and subsequent burst. Note that this chart does not adjust for inflation.

Case-Shiller: Seattle Home Price Index

Here’s the Seattle Times’ story about this month’s numbers: As Seattle home prices dip, outer reaches of metro area are humming along

(Home Price Indices, Standard & Poor’s, 2018-09-25)

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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.

36 comments:

  1. 1
    Justme says:

    This may very well be the peak of the bubble. I predicted the peak would occur in 2017. With some luck I will be off only by 7 months. We shall see.

  2. 2

    If C-S was showing any kind of a price decline that far back it’s evidence that they don’t handle bidding war situations well. But that would be a criticism of the earlier month values, which were probably higher than they should have been.

    Basically I’m saying that both C-S and the median were affected by bidding wars but that C-S could have avoided that by throwing out bidding war transactions. But if C-S doesn’t have the list price data perhaps those situations weren’t obvious to them.

  3. 3
    David says:

    I still maintain that Amazon is in a shadow-war with Seattle. I still see no evidence of significant moves into Seattle from Amazon people. I’d lay money on the line that Amazon people are slyly being moved to other areas. OR Amazon is building up a pressure wave of people to be rapidly placed into their new HQ2 location.

    Also, just a reminder that Case-Schiller says the historic return on housing is 0%.

    Local governments almost certainly have algorithms to determine how to raise taxes across a wide enough area to extract those gains over time.

  4. 4
    Justme says:

    RE: Kary L. Krismer @ 2

    Case-Shiller does not attempt to account for whether prices rise more than they otherwise would because of bidding wars, nor does Case-Shiller attempt to account for why prices drop faster than they otherwise would when there are no bidders. And that’s they way it should be. IMO. I don’t care to get into a discussion of this with Kary. It is unlikely anything useful will come of it.

  5. 5
    LessonIsNeverTry says:

    By Kary L. Krismer @ 2:

    Basically I’m saying that both C-S and the median were affected by bidding wars but that C-S could have avoided that by throwing out bidding war transactions.

    Why would they throw out bidding war transactions? A sale is a sale. Should they throw out transactions based on funding style too? Cash only versus 5% down versus 20% down versus adjustable rate?

    If the market is insane then the metrics should reflect that fact.

  6. 6
    Jason says:

    RE: Kary L. Krismer @ 2 – Why throw out bidding war transactions? That was the reality of the market, and those transactions seem to be valid data points. I wanted to buy a house this spring, but my offer didn’t win. Why shouldn’t that sale be counted in C-S? It reflects the state of the market at that time.

    Looking at it the other way, why should C-S even consider list price? I understand your hypothesis that the slowdown is the result of sellers now listing too high, but C-S doesn’t seem like a metric that’s trying to describe why something is happening, just what’s actually happening.

    If C-S did throw out bidding wars, wouldn’t it basically have no data for years?

  7. 7
    biliruben says:

    I generally think Kary has many reasonable and valuable point of view.

    This isn’t one of them. I’m guessing he has a strong bias towards thinking Realtors have a better idea of the value of the house than what the market itself determins. I’ve known too many bad Realtors, clueless about value, to even give this thinking any weight at all.

    But maybe there is some other reason he thinks we should exclude bidding wars that I’m not understanding.

  8. 8
    biliruben says:

    I generally think Kary has many reasonable and valuable point of view.

    This isn’t one of them. I’m guessing he has a strong bias towards thinking Realtors have a better idea of the value of the house than what the market itself determines. I’ve known too many bad Realtors, clueless about value, to even give this thinking any weight at all.

    But maybe there is some other reason he thinks we should exclude bidding wars that I’m not understanding.

  9. 9
    Rupert D says:

    In the CS press release when you look at the % change from May/June and June/July by city you will see a large drop off in increases in the most recent June/July change. So many cities are experiencing the same slowdown with Seattle and San Diego a little worse. For June/July the CS press release shows Seattle increase at 0.0%, San Diego 0.0%, LA, Boston, Charlotte and NY at 0.1%, Dallas and Composite-10 at 0.2% and Denver, Chicago and Composite-20 at 0.3%.

  10. 10

    By Justme @ 4:

    RE: Kary L. Krismer @ 2

    [Ignorant comments about C-S omitted.] I don’t care to get into a discussion of this with Kary. It is unlikely anything useful will come of it.

    Then why do you post? do you enjoy being a troll so much that you can’t resist?

  11. 11

    RE: Jason @ 6RE: LessonIsNeverTry @ 5 – C-S doesn’t include all transactions as paired sales. If the value goes up or down too much they assume that there was some other factor at play, such as maybe a significant change in condition or an inside sale. I’m suggesting that some of these bidding war situations are so far ourside the value that they should be excluded, and I suspect some are, but just not enough.

    Again, it’s similar to how bidding wars impact the median but not the overall value of houses. Bidding wars just allow some lucky sellers to receive more than FMV. Ideally C-S could account for that to give a more accurate indication of the change in value that the median number does not do.

    Finally, who’d have thunk that suggesting prior C-S numbers were TOO HIGH would be so controversial! ;-)

  12. 12

    By biliruben @ 7:

    This isn’t one of them. I’m guessing he has a strong bias towards thinking Realtors have a better idea of the value of the house than what the market itself determins. I’ve known too many bad Realtors, clueless about value, to even give this thinking any weight at all.

    But maybe there is some other reason he thinks we should exclude bidding wars that I’m not understanding.

    As to the last sentence, I just posted that.

    As to the first paragraph, no I don’t think agents are necessarily that great at valuing property, that’s not it at all. And not relevant to this topic, but I think one of the significant reasons for increased inventory right now is agents (and/or their sellers) are overvaluing properties.

  13. 13
    biliruben says:

    Def. exclude non-arms-length sales.

    But you were talking about comparing sales price to list, with list being usually determined or at least heavily influenced, but a Realtor. So not OT.

    If you are comparing sales price to previous sale, then you are probably including many down to the studs renovations.

    I just don’t see how you would exclude bidding wars without taking into account the influence of the Realtor’s perceived value.

  14. 14

    By biliruben @ 13:

    But you were talking about comparing sales price to list, with list being usually determined or at least heavily influenced, but a Realtor. So not OT.

    If you are comparing sales price to previous sale, then you are probably including many down to the studs renovations.

    I just don’t see how you would exclude bidding wars without taking into account the influence of the Realtor’s perceived value.

    I don’t get the second paragraph. You’re always comparing the sales price to a previous sale when you’re dealing with paired sales. But those to the studs remodel situations would typically get excluded, as would many flipped sales (which would be easy to catch).

    The reason I mentioned list price is that selling well over list would make the bidding war situations more obvious. Sure you could just have a situation where a listing was accidentally priced low. But without having the list price piece of information the only way they could knock them out is if the price were obviously in excess of what would be expected. By having access to the list price they could give those bid over list extra scrutiny.

    Maybe it’s possible that C-S can’t realistically handle the bidding war situations better. If that’s the case then we’d just have to live with the fact that data from the last 2-3 years was likely higher than it should have been, just as was the case with the median if you want to use that as an indicator of value somehow. It’s sort of the flip side of how the data was probably lower than it should have been when there were a lot of distressed properties.

  15. 15
    Macro Investor says:

    Let’s stay focused on reality and try to keep our emotions in check. This report is only worthy of a yawn. Sales have slowed down a bit. Inventory is up a bit. It’s still an overheated sellers market. It’s just not insanely so.

    Markets don’t just go up or down. They can go sideways for a long time. The first pause in an up trend usually predicts that trend will continue. I know some of you are dreaming of a crash. In the last crash buyers mostly found only worn out junk for sale.

  16. 16
    Jason says:

    RE: Kary L. Krismer @ 14 – I’m struggling with the idea that the sales that were the result of a bidding war weren’t reflecting the fair market value at that moment. You might not like how the market has functioned the last few years (I certainly hate it), but it is reflective of the price that the property was able to command at the time it was placed on the market.

    I’m not trying to be snarky, but the dictionary definition of fair market value is:
    noun
    a selling price for an item to which a buyer and seller can agree.

    The bidding war is the mechanism that produced the price to which the buyer and seller agreed, which was ultimately the price that the market valued the house at (otherwise, I would have been able to buy it for less). I just don’t see why that shouldn’t be reflected in the C-S data, since it was the reality of how the market was functioning and the actual prices that were being paid.

  17. 17
    uwp says:

    One thing I noticed when looking at the Seattle line-graph for the CS data is that from 2003 into 2007 there wasn’t much seasonality to the pricing trends like there has been the last 5ish years.

    2012-2018 is like a staircase, while 2003-2007 was more of a straight line. (Or maybe the stairs get lost in the scale of the graph?)

    Anyway, not sure if it matters at all, I just found it interesting.

    I’m sure we will see the CS numbers dip for Seattle the next few months. But I don’t think we can know what next year will be like until we see if inventory will stabilize around 2014/2013 numbers (low), 2004/2005 numbers (average), or 2006/2007 numbers (high).

    I’m happy Justme can pat himself on the back for “only” being 7 months off in his highly specific peak call from June 2017. (Even though he was wrong with the very first CS report of the year).

  18. 18
    David says:

    If Case-Schiller is correct and Seattle is the only major metro where prices are not rising then:

    1) Seattle got out ahead of the other states on pricing, and the others are catching up and then decline?
    2) Seattle has unique economic/political causes for the decline?

  19. 19
    Justme says:

    RE: David @ 18

    Nice try in trying to frame the current situation only as “Seattle got out ahead of the other states on pricing”, as if there is anything natural about 2013-2018.

    What is really going on is a full-fledged bubble on both the east and west coasts, with Seattle being the worst bubble of them all.

  20. 20
    Erik says:

    RE: Justme @ 19
    We are surely headed into hypersupply and next is recession. I think we will be in hypersupply a while though. Depending on government interference, we’ll see how long it lasts. I say 6 years, because that supports my 2024 crash prediction, but a crash could happen earlier.

    People on this site were screaming bubble since recovery and through expansion. Now is the time to show some concern and I’m not hearing much of it.

  21. 21
    wreckingbull says:

    By Erik @ 20:

    RE: Justme @ 19

    People on this site were screaming bubble since recovery and through expansion. Now is the time to show some concern and I’m not hearing much of it.

    I know it is hard to believe, but many of us here are not slaves to real estate price fluctuations. That is the difference between investing and speculating.

  22. 22

    By Jason @ 16:

    RE: Kary L. Krismer @ 14 – I’m struggling with the idea that the sales that were the result of a bidding war weren’t reflecting the fair market value at that moment. You might not like how the market has functioned the last few years (I certainly hate it), but it is reflective of the price that the property was able to command at the time it was placed on the market.

    I’m not trying to be snarky, but the dictionary definition of fair market value is:
    noun
    a selling price for an item to which a buyer and seller can agree.

    The bidding war is the mechanism that produced the price to which the buyer and seller agreed, which was ultimately the price that the market valued the house at (otherwise, I would have been able to buy it for less). I just don’t see why that shouldn’t be reflected in the C-S data, since it was the reality of how the market was functioning and the actual prices that were being paid.

    I’m aware of all that, and wouldn’t necessarily disagree. But my point is a bit more fine.

    I once had a true bidding war situation (two buyers sitting across the table from one another increasing their price), and they were bidding higher and higher and both acknowledged that the house was not worth what they were bidding. And in fact when the appraisal came in it did not come close to what the winning bidder bid (but it didn’t matter because of the large down payment). To most buyers that house was not worth what the buyer paid–the sales price was in excess of FMV. Every party to the transaction acknowledged that. But between the winning buyer really wanting that house and the bidding war situation the sales price increased significantly.

    So FMV is more of a theoretical concept. The selling price can be either above or below FMV. So as to your definition I would add the word “hypothetical” before the words buyer and seller. And to prove that point, if I offered to pay you $25,000 for an ordinary quarter, and you agreed, that wouldn’t mean the FMV of that quarter was $25,000.

    Or getting back more to real world, it’s generally accepted that if a seller starts their listing too high that they tend to get less for their property in the end. The FMV of the house didn’t change due to the listing strategy, only the sales price.

    Finally, if FMV equaled sales price, banks wouldn’t need to do appraisals.

  23. 23

    By uwp @ 17:

    One thing I noticed when looking at the Seattle line-graph for the CS data is that from 2003 into 2007 there wasn’t much seasonality to the pricing trends like there has been the last 5ish years..

    Good catch, but there was more seasonality 2009-2012 than the last five years. That was due to C-S’s inability to deal well with distressed properties during that period. I’m not sure what would be causing it for the past five.

  24. 24

    By Kary L. Krismer @ 2:

    If C-S was showing any kind of a price decline that far back it’s evidence that they don’t handle bidding war situations well. But that would be a criticism of the earlier month values, which were probably higher than they should have been.

    Basically I’m saying that both C-S and the median were affected by bidding wars but that C-S could have avoided that by throwing out bidding war transactions. But if C-S doesn’t have the list price data perhaps those situations weren’t obvious to them.

    This comment generated a lot of response, so I want to clarify and even backtrack from the second paragraph.

    As to the first paragraph, I will admit there isn’t a lot of evidence that C-S doesn’t handle bidding war situations well. It’s merely a one month situation, where the evidence they didn’t handle distressed properties involves years of evidence. Also, for the current situation we’re dealing with my impression of the market more, where for the distressed property the supporting evidence was months of NWMLS data. As to my impression of the market I will admit not having dealt at all with Pierce County this year, and only a relatively narrow range of condos. The years of NWMLS data is much better than my impression of the market during the months of May-July. Still the distressed property situation proves C-S is not perfect, as does probably the seasonality brought up in a recent comment. So I’m basically saying there is a good chance that C-S is not dealing with bidding wars well, but it’s not nearly as clear as their handling of distressed properties.

    As to the second paragraph, I want to walk that back a bit. I’m not sure that there is a lot C-S could have done to deal with the problem, if it exists. Basically it may be difficult for them to identify bidding war situations. The only fix I see for that is tightening up their standards for which transactions get thrown out. Maybe they should do that. Maybe that would have helped them deal with distressed properties. But I don’t know enough about how they decide to throw out sales to have an opinion on that. And in any case, until they do make a change (unlikely), we will just have to be looking out for the possibility that C-S did have a problem in that area.

  25. 25

    On the political topic of the incompetence of Seattle City government, I found this article almost funny. Despite all the money Seattle has been pumping into bicycle safety/commuting, both by percentage and raw numbers the number of bike commuters is down.

    https://www.seattletimes.com/seattle-news/data/seattle-bike-commuting-hits-10-year-low-census-data-show/

    Further proof that the last thing you should ever want is to be in a group helped by the Seattle City Council.

    Returning to real estate, is it any wonder that the homeless problem has worsened? Should people be even more concerned about the impact of proposed zoning changes on neighborhoods?

  26. 26
    Notme says:

    Kary Index for this thread
    was at 36 percent
    before I posted

    -a posting bubble haiku

  27. 27
    David says:

    I have to disagree with hyper-supply. Seattle has a huge swath of houses that need to be knocked down and scraped away. Instead, hopeless broken-down properties are superficially renovated and sold at higher prices. To me, this a per se evidence of undersupply.

    New supply ‘should’ devalue those paper mache properties and reveal them for what they are – crapboxes with lipstick. Which is why I am curious if the slowdown in sales is resulting from the terrible quality of the remaining inventory.

    By Erik @ 20:

    RE: Justme @ 19
    We are surely headed into hypersupply and next is recession. I think we will be in hypersupply a while though. Depending on government interference, we’ll see how long it lasts. I say 6 years, because that supports my 2024 crash prediction, but a crash could happen earlier.

    People on this site were screaming bubble since recovery and through expansion. Now is the time to show some concern and I’m not hearing much of it.

  28. 28
    pfft says:

    By Kary L. Krismer @ 25:

    On the political topic of the incompetence of Seattle City government, I found this article almost funny. Despite all the money Seattle has been pumping into bicycle safety/commuting,

    Right so just forget about safety and who cares if people get smushed by cars.

    Your article doesn’t even 100% support your claims.

    “Something to keep in mind about the census data is that it only pertains to commuting. It doesn’t capture those people who bike to school, to run errands or to meet up with friends. It doesn’t capture people who bike for recreation. So we can’t say that cycling is down overall in Seattle just based on the census.”

  29. 29
    Erik says:

    RE: David @ 27
    In 2006 and 2007 when we had hypersupply, people were saying the same thing. They said remodelers were just putting paint, appliances, and flooring in rundown houses and selling them for a profit. Garbage on the market is what happens in hypersupply.

  30. 30

    By pfft @ 28:

    By Kary L. Krismer @ 25:

    On the political topic of the incompetence of Seattle City government, I found this article almost funny. Despite all the money Seattle has been pumping into bicycle safety/commuting,

    Right so just forget about safety and who cares if people get smushed by cars.

    Apparently you have trouble understanding. My comment was not anti-bike. My comment was pointing out that despite Seattle attempting to do something, they again fail to accomplish the task and possibly have negative impact.

    But if you’re worried about the safety of bike riders, another of Seattle’s pet policies would be worth a mention: Streetcars. Their tracks are dangerous for bicycles, but Seattle pushes ahead with them anyway even though there are other reasons to not do so. (Sorry Ira!)

    As to the rest of your post, that the study didn’t include other things like recreational use of bikes does not mean that the data there isn’t going the same direction. It’s just that there’s no data. But part of the reason to promote commuting by bike is to help traffic, and traffic needs help during the commute periods. So except for commuting to school by full time students in the morning and late afternoon, those uses wouldn’t be particularly critical for traffic improvement.

  31. 31
    biliruben says:

    No, it’s not anti-bike. It’s anti-government. I agree, the city (particularly the Mayor from what I hear, not the city council) has put the promised downtown bike network and indefinite hold. This bike network is essential to improve safety improvements to encourage an increase in ridership. I don’t actually believe the ACS data, as it doesn’t mesh with on the ground (or under) counter data, which is much more accurate. Ridership has leveled, likely due mostly to two straight horrific winters, but that drop seems like it is too precipitous to be real. It’s a small sample of Seattlites being asked their commuting behavior over the prior week. I’d go with counters.

    The leveling off from the counter data is concerning, however. And I am very frustrated by government inaction, not action. Build the network, Durkin, and they will come.

  32. 32

    RE: biliruben @ 31 – Two horrific winters? Did I miss something? I remember them being rather mild. Are you referring to more rain?

  33. 33
    biliruben says:

    Just going by what friends told me. Particularly 2017. Hard, continuous rain.

    I am in Albuquerque, which would have loved even a drop of that rain.

  34. 34
    biliruben says:

    As a biker, I’d personally rather have snow than 40 degrees and heavy rain.

  35. 35
    biliruben says:

    https://www.wunderground.com/history/monthly/us/wa/seattle-boeing/KBFI/date/2017-5

    Feb to May look like they got about twice the usual rainfall, and nearly every day. When the temp is in the 40s, that’s some tough bike weather. Especially when dodging cars without proper infrastructure.

  36. 36
    biliruben says:

    Any idea why comments take hours to post?

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