Case-Shiller: Prices Slid Most in Low Tier in September

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – September data is released in November).

Here are the basic Case-Shiller stats for the Seattle area* as of September:

September 2010
Month to Month: Down 0.6%
Year to Year: Down 2.6%
Prices at this level in: March 2005
Peak month: July 2007
Change from Peak: Down 24.6% in 38 months
Low Tier: Under $262,889
Mid Tier: $262,889 to $405,354
Hi Tier: Over $405,354

Eighteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between August and September (vs. 15 July to August). Only Washington and Las Vegas saw month-to-month increases.

Here’s a look at the latest local tiered data, back through 2000:

Sea-Case-Shiller-Tiers_2010-09

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

Sea-Case-Shiller-Tiers_2010-09

Nearly every city tracked by Case-Shiller has seen the same pattern: The low tier is losing ground faster than the middle and high tiers. Month to month, the low tier was down 2.5%, the middle tier fell 1.1%, and the high tier decreased less than 0.1%.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Case-Shiller-Redfin-Markets_2010-09

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

Case-Shiller-Peak-Declines_2010-09

Here’s the flip side of the peak decline chart—a graph since January 2009, indexed to January 2009 = 100%:

Case-Shiller-2009-Bounce_2010-09

Only Washington DC seems to still be experiencing a boost in prices. Vegas has been basically flat the last few months, which is not surprising given how badly prices there continued to be hammered despite the tax credit boost seen everywhere else.

Given that this new downturn started in most cities in July as soon as the tax credit expired, I think we’re seeing more than just a seasonal drop here.

Methodology: The Case-Shiller index tracks price changes in sets of homes of similar size and style to better determine changes in what people are willing to pay for the same home over time. If data is available from an earlier transaction for the same home, the two sales are paired and treated as a “repeat sale.” Repeat sales that are too far apart, sales between family members, lot splits, remodels, and property type changes (e.g. from single-family to condos) are excluded from the calculations. All remaining repeat sales are totaled together and weighted based on the time between each sale, then the data for the most recent three months is averaged together to create a given month’s index value (i.e. – September’s index represents the average of the data from July through September).

The three price tiers plotted in the charts below simply represent the top, middle, and bottom third of all sales, based on the initial sale price. In other words, if there were 3,000 sales in the three-month period, 1,000 of them would be in the low tier, 1,000 in the middle tier, and 1,000 in the high tier, by definition.

*[Case-Shiller defines Seattle as the Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area, which includes all of King, Pierce, and Snohomish counties.]

  • Morendurff

    Has Seattle hit bottom? Most markets had between 30-45 months since their peak. We still seem to be 10-12 months from the time that other market took to hit bottom. We're different on two counts: 1) better overall economy, but the buyers of our products (W7, 777, mail order) are still sick; 2) we stretched to get into homes and the 3 year window for ARMs to reset will finish in 2011–this explains the 71% increase in foreclosure filings. All Seattle neighborhoods are going leak a few cheap houses that will stall any recovery, stretching out the drop in house prices: 1Down 2-15 % in the next 12 months.