{"id":2291,"date":"2008-08-01T10:38:29","date_gmt":"2008-08-01T17:38:29","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=2291"},"modified":"2008-08-01T18:36:24","modified_gmt":"2008-08-02T01:36:24","slug":"bubbles-vs-steady-appreciation","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/","title":{"rendered":"Bubbles vs. Steady Appreciation"},"content":{"rendered":"<p>Here&#8217;s an interesting way to look at the Case-Shiller data: comparing the actual index values to theoretical values as they would look if they grew at a steady rate year-over-year.<\/p>\n<p style=\"margin: 5px auto; width: 600px; font-size: 0.8em; text-align: center;\"><img loading=\"lazy\" decoding=\"async\" style=\"border: 0; margin: 5px;\" title=\"Case-Shiller HPI and Annually Compounded Rates\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-seattle-comp_2008-05.png\" alt=\"Case-Shiller HPI and Annually Compounded Rates\" width=\"600\" height=\"545\" \/><\/p>\n<p>The data starts in 1990 because that is the first year that the Case-Shiller index began tracking Seattle.  1990 may not be the best year to use as a baseline, since it was right at the peak of a good-sized run-up (see the <a title=\"King County Home Prices: 1946-2007\" href=\"http:\/\/seattlebubble.com\/blog\/2008\/02\/19\/king-county-home-prices-1946-2007\/\">60-year Seattle home price graph<\/a>), but it still gives us a good idea of where home prices would be if the appreciation curve had remained in a healthy range.<\/p>\n<p>Up until about 2003, home prices in our area held pretty close to the 5% yearly appreciation curve.\u00a0 At our peak, we crested just over 7% per year, and as of the latest data, Seattle&#8217;s Case-Shiller HPI sits at around 6.3% per year, or 25% above the 5% level.<\/p>\n<p>For comparison, here is the same plot, but with New York, Chicago, Boston, and San Francisco added, and all cities re-indexed to 1990=100:<\/p>\n<p style=\"margin: 5px auto; width: 600px; font-size: 0.8em; text-align: center;\"><img loading=\"lazy\" decoding=\"async\" style=\"border: 0; margin: 5px;\" title=\"Case-Shiller HPI and Annually Compounded Rates\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-5-city-comp_2008-05.png\" alt=\"Case-Shiller HPI and Annually Compounded Rates\" width=\"600\" height=\"545\" \/><\/p>\n<p>Is there some compelling argument why home prices in Seattle should be averaging around 6% per year appreciation since 1990, while values in other larger, <a title=\"Wikipedia: Global Cities\" href=\"http:\/\/en.wikipedia.org\/wiki\/Global_city\">more world-class<\/a> cities are all tumbling below the 5% per year mark?  If there is, I&#8217;d love to hear it.  If not, I don&#8217;t see any reason to expect that prices won&#8217;t keep falling here in the Puget Sound until they are more in line with the norm.<\/p>\n<p><em>This method was inspired by the <a title=\"Median House Price vs. Annually Compounded Interest\" href=\"http:\/\/www.housingcorrection.com\/compoundincrease\/compoundincreaseform.aspx\">Median House Price vs. Annually Compounded Interest<\/a> tool written by regular commenter Jonness.\u00a0 You can use the tool to compare hundreds of other cities in this manner. Jonness also has a number of other valuable home price comparison tools on his website <a title=\"HousingCorrection.com\" href=\"http:\/\/www.housingcorrection.com\/\">HousingCorrection.com<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here&#8217;s an interesting way to look at the Case-Shiller data: comparing the actual index values to theoretical values as they would look if they grew at a steady rate year-over-year. The data starts in 1990 because that is the first year that the Case-Shiller index began tracking Seattle. 1990 may not be the best year&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8],"tags":[86,222,200],"coauthors":[],"class_list":["post-2291","post","type-post","status-publish","format-standard","hentry","category-stats","tag-case-shiller","tag-graphs","tag-statistics"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bubbles vs. Steady Appreciation \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Bubbles vs. Steady Appreciation \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Here&#8217;s an interesting way to look at the Case-Shiller data: comparing the actual index values to theoretical values as they would look if they grew at a steady rate year-over-year. The data starts in 1990 because that is the first year that the Case-Shiller index began tracking Seattle. 1990 may not be the best year...\" \/>\n<meta name=\"twitter:image\" content=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-seattle-comp_2008-05.png\" \/>\n<meta name=\"twitter:creator\" content=\"@The_Tim\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleBubble\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The Tim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/\",\"url\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/\",\"name\":\"Bubbles vs. Steady Appreciation \u2022 Seattle Bubble\",\"isPartOf\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/#primaryimage\"},\"thumbnailUrl\":\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-seattle-comp_2008-05.png\",\"datePublished\":\"2008-08-01T17:38:29+00:00\",\"dateModified\":\"2008-08-02T01:36:24+00:00\",\"author\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\"},\"breadcrumb\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/#primaryimage\",\"url\":\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-seattle-comp_2008-05.png\",\"contentUrl\":\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2008\/08\/case-shiller-seattle-comp_2008-05.png\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2008\/08\/01\/bubbles-vs-steady-appreciation\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/seattlebubble.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Bubbles vs. Steady Appreciation\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\",\"url\":\"https:\/\/seattlebubble.com\/blog\/\",\"name\":\"Seattle Bubble\",\"description\":\"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\",\"name\":\"The Tim\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"caption\":\"The Tim\"},\"description\":\"Tim Ellis is the founder of Seattle Bubble. 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