Last month (September 2019), when reporting the July results for the Seattle Case Shiller Home Price Index, we observed that the improvement from the June index results “could point to a return to seasonally higher home prices across the three counties by August, as already indicated by data for that month from the Northwest Multiple Listing Service (NWMLS).” At the same time, we noted that “prices are likely to remain lower on a month-by-month basis, and prospective sellers are cautioned that the monthly increases on the index have been narrowing since March.”
With S&P/Dow Jones’ October 29 publication of the August Case Shiller results, both predictions were borne out. As Philip Murphy, Managing Director and Global Head of Index Governance at S&P Dow Jones Indices announced in the official index press release, “Seattle’s year-over-year change turned positive (+0.7 percent) after three consecutive months of negative year-over-year price changes.”  The upward shift that began in June concluded a three-month reign of lower residential prices in the Seattle metropolitan region comprising King, Pierce, and Snohomish Counties (“Seattle MSA”). (The index factors only residential resales in these areas; new construction and condominium sales are excluded.) The August results reinforce our sense last month that “[b]y mid-autumn, selling volumes may be expected to stabilize along with residential selling prices and market times.”
Year-over-year indices for competing West Coast regions Portland and San Diego have remained positive and continue to rise, while index gains inched lower in Los Angeles and turned slightly negative in San Francisco. (See Chart B below.) Moreover, for the fifth time since January 2012, monthly Case Shiller indices were down for three of these cities: Seattle as well as the Bay Area and L.A. (most recently in January 2019). In 2012, the lower results came at the end of steadily declining trends for all West Coast gateways, including San Diego, at the end of the global financial crisis that kicked off with the subprime housing bust. There are presently no indications that such a trend will now resume. August in Puget Sound has historically seen the onset of a seasonal downturn in prices that bottoms in January. Both August and September monthly changes in the Case Shiller Index have averaged negative 0.32 percent since 2010, so the August 2019 monthly difference of -0.29 percent is slightly higher than the historical mean.
Seattle’s ongoing reversal stands in contrast to trends elsewhere. Among the “slow-growth cities” shown in Chart A, no observable change in the Case Shiller Index was reported for residential prices in Atlanta, New York City, or Washington DC.
Careful attention to the price trend should continue, as home prices are not likely to rise at the rates seen in recent years without further contraction in inventories. Home inventories for sale are a reliable indicator of future selling prices. An October press release by the NWMLS proclaimed that home inventories in the region were lower year over year (i.e., to 2019 from 2018.)  Yet while as of October, this was certainly true of residential inventories in the Seattle MSA, this year’s monthly inventories remained above those of 2017 and 2016 (shown with new listings subtracted in Chart D); and in West Bellevue and its vicinity, they were still higher than last year’s as well (Chart E). The good news for sellers is that swells of inventory that had accumulated in the 17 months prior to August 2019 appear to have been sold through by that month in the Seattle MSA, and by October in West Bellevue (Charts F and G).
Dean Jones, owner and CEO of Realogics SIR, offered the following take on the August Case Shiller report: “When we consider this inflection point, the state of historically low interest rates, the booming stock market with tech stocks peaking (meaning that liquidity events are possible for RSUs, and cashing in for down payments), and knowing that there is still excellent selection to choose from with motivated sellers, this is a phenomenal opportunity for buyers.”
For more details on the August 2019 Case-Shiller Index results, download the S&P Dow Jones Case-Shiller summary report. For a copy of our 2018/2019 Market Report, along with details on the implications for homes in your neighborhood, contact a local RSIR broker. Waterfront home buyers and sellers: see our 15-month 2019 waterfront report at RSIRWaterfront.com.
 “NWMLS Brokers Say Transition to Fall Creating Opportunities for Buyers,” Northwest Multiple Listing Service, 7 October 2019.
 “Restricted stock units” such as those held by employees of Amazon and other local tech leaders.