Case-Shiller Tiered Data
Aubrey Cohen, in his blog, points to Case-Shiller tiering their data into 3 levels of priciness: <331K, 331-485K, >485K for Seattle.
It's pretty interesting. I made some pretty graphs, but I don't maintain a website any longer to upload them to. If anyone wants them to post here, I'll email them to you.
Looking back at the 90s, the data captures the very peak of the last top, and the subsequent decline.
What it shows is that the high end took a pretty big bath, the medium took a medium bath, and the low end didn't really decline at all. It just went flat.
The low-end also continued to appreciate at a greater rate than the other two tiers, and has continued to do so up to today.
Why this is, I don't know. My guess is that the value of the underlying land has increased at a greater pace than the structures, and also held it's value better in the decline, making even the the crappiest of crap-shacks hold their worth. Or perhaps low-end buyers were unwilling or unable to sell at a loss last time around, so they didn't sell at all.
If I find the time, I'll take look at other cities with more pronounced and complete price declines to see that pattern holds up.
This is looking pretty good for my hopes. I bought the cheapest house that I thought our family would be comfortable in a few years ago, and have been waiting out the price declines at the medium (well, bottom of high in these categories)-end. Perhaps it will work out for us, though this is a completely different sort of run-up than the last one, so the rules may not apply.
It's pretty interesting. I made some pretty graphs, but I don't maintain a website any longer to upload them to. If anyone wants them to post here, I'll email them to you.
Looking back at the 90s, the data captures the very peak of the last top, and the subsequent decline.
What it shows is that the high end took a pretty big bath, the medium took a medium bath, and the low end didn't really decline at all. It just went flat.
The low-end also continued to appreciate at a greater rate than the other two tiers, and has continued to do so up to today.
Why this is, I don't know. My guess is that the value of the underlying land has increased at a greater pace than the structures, and also held it's value better in the decline, making even the the crappiest of crap-shacks hold their worth. Or perhaps low-end buyers were unwilling or unable to sell at a loss last time around, so they didn't sell at all.
If I find the time, I'll take look at other cities with more pronounced and complete price declines to see that pattern holds up.
This is looking pretty good for my hopes. I bought the cheapest house that I thought our family would be comfortable in a few years ago, and have been waiting out the price declines at the medium (well, bottom of high in these categories)-end. Perhaps it will work out for us, though this is a completely different sort of run-up than the last one, so the rules may not apply.
Comments
Easy credit may have increased competition at the low end. If the reversion to mean theory is accurate, we may see a larger fall at the low end during this downturn.
Most economists who write about the bubble tend to think the low-end values will weather the storm the best, however. Time will tell.
I think access to easy credit may have actually inflated the mid-to-high tier more than than the low-tier. Those buying the low-tier may have been a bit more conservative; trying to live within their means.
Those buying a 450K house as their starter-home simply because the bank would lend them the money, but they had to stretch and lie to do so - those folks are going to be in the biggest trouble.
How much of that happened in each tier? I'd love that data!