Case-Shiller: Seattle Home Prices Down Nearly 10% from Last Year

While most of us were out enjoying the holiday break last week, the folks at S&P/Case-Shiller released the latest data for their home price indices, which provides the most accurate measure of single-family home price trends for twenty markets across the country. Since S&P’s coverage conveniently includes each of the eight markets that Redfin provides service in, let’s take a look at the home price data from the S&P/Case-Shiller Home Price Indices (HPI).

I apologize for my tardiness in this post. Future posts regarding the Case-Shiller data will be more timely.

Before we get to the charts, let me give a brief explanation of what the Case-Shiller HPI is. To calculate the index, they look at repeat sales of single-family homes over an “arms-length” period of time. Home sales that include things like major remodels, property splits, and sales between family members are disregarded, and sale pairs are weighted based on the length of time between each sale. After all this, the current month’s data is used to calculate a three-month rolling average which is the reported HPI. Data is released on the last Tuesday of every month, for the period two months prior (i.e. – September data is released in November).

For a more detailed explanation of their full process, check out their methodology pdf.

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

September 2008
Month to Month: Down 1.4%
Year to Year: Down 9.8%
Change from Peak: Down 10.1%

The following chart shows the Seattle HPI scaled such that the July 2007 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the Seattle HPI was at or lower than it was in the latest data (April 2006).

Aside from a brief uptick in April, home prices in Seattle have been steadily declining since peaking in July last year. The fastest declines so far came between October last year and January this year, and September’s 1.4% month-to-month drop was right up there with this period of rapid decline.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare Seattle’s performance to other areas across the country:

And here’s one more chart, in which I have lined 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.

Home prices in Seattle peaked far later than almost every other Case-Shilller-tracked city, and have therefore understandibly not fallen nearly as far as many other cities to date. That being said, price declines in Seattle are actually on the more extreme side so far compared to where other cities were 14 months from their respective peaks.

Since Seattle’s home price peak was not as high as many of these cities (such as LA and San Diego) it seems unlikely that home prices will end up falling as much here. Of course, this may be of little comfort, since home prices in those cities are already over 30% off their peak and rapidly approaching 40 to 50 percent off.

With the relatively tame degree of home price drops experienced in Seattle so far, fence-sitting home sellers still have a chance to sell before the Seattle area experiences the more extreme drops of 20% or more, which at this point would seem to be a virtually unavoidable minimum bottom.

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