Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries from June 30th, 2008

Local Banks Slammed by Housing Bust

By The Tim on June 30th, 2008 at 10:30 AM · 30 Comments

From today’s Everett Herald: Housing slump hits local banks hard

Low interest rates, the loss of the home construction boom and investor pessimism all are weighing down on bank stocks, dealing a big blow to all three of the local banks traded on Wall Street.

Lynnwood’s City Bank, along with Frontier Financial and Cascade Financial — both Everett-based banking firms — have seen their share prices decline by more than half in the past year.

They’re not alone. The nation’s biggest banks and thrifts also are suffering. Shares of Seattle-based Washington Mutual, one of the hardest hit by the mortgage meltdown, have plummeted 90 percent from their peak in 2007. The Standard & Poor’s Bank Index, which includes such national names as US Bancorp, Keycorp and Wells Fargo, has tumbled 50 percent in the past year.

Note that unlike Washington Mutual, the difficulties these local banks are experiencing can’t be blamed on making subprime loans in California. It’s all local.

Sara Hasan, banking analyst at Seattle’s McAdams Wright Ragen Inc., said the local banks are seen as vulnerable to the downturn in housing, as a substantial number of their loans have been to the construction industry.

“In the Northwest especially, it seems like we’re seeing the first wave of difficulties with the housing market,” Hasan said. “Bankers are nervous, and their investors are nervous, too.”

It seems to me that they have good reason to be nervous.

In related news, WaMu replaces president of branch network.

Washington Mutual said today it has replaced James Corcoran, president of its vast retail branch network.

Stephen Rotella, WaMu’s president and CEO, will assume Corcoran’s duties until a permanent successor is named.

(Eric Fetters, Everett Herald, 06.30.2008)
(Times Staff, Seattle Times, 06.30.2008)

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Poll: How many cars/trucks does your family own for personal use?

By The Tim on June 29th, 2008 at 12:05 AM · 3 Comments

Please vote in this poll using the sidebar.

How many cars/trucks does your family own for personal use?

  • 0 (3%, 9 Votes)
  • 1 (43%, 121 Votes)
  • 2 (39%, 111 Votes)
  • 3 (8%, 23 Votes)
  • 4+ (7%, 18 Votes)

Total Voters: 282


This poll will be active and displayed on the sidebar through 07.05.2008.

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Foreclosures, FHA, Commercial, & Countrywide

By The Tim on June 27th, 2008 at 10:08 AM · 51 Comments

Here are a few recent stories that have been covered elsewhere and are worth at least mentioning here.

Latest foreclosure statistics: Seattle P-I, Foreclosures in Seattle higher, but much lower than nation’s

The Seattle area had about twice as many foreclosures in May as it did a year earlier but continued to have a far lower foreclosure rate than the country as a whole, according to new reports.

King and Snohomish counties had a combined 881 trustee-sale notices and bank repossessions in May, one for every 1,219 households, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosures. The area’s rate put it 148th out of 229 metro areas the company ranks.

FHA tries to ride in to the rescue housing bubble (they’re a little late for that). Coverage:

The much-vaunted commercial real estate market is apparently showing signs of weakness as well: Seattle Times, Commercial real estate brokers worry about Seattle buildings

After climbing for years, are office lease rates in downtown Seattle getting ready to turn south?

Some commercial real-estate professionals think so.
…
More than 2 million square feet of new office space — the equivalent of 1 ½ Columbia Centers — will come on the market in greater downtown next year. Almost none of it is pre-leased.

And lastly, Christine Gregoire is taking her turn beating the dead horse that is Countrywide. Where was she when they were busily pumping the housing bubble up with all of these ridiculous loans? Not running for re-election, that’s where. Coverage:

Did I miss any recent stories that should have been included?

(Aubrey Cohen, Seattle P-I, 06.13.2008)
(Elizabeth Rhodes, Seattle Times, 06.13.2008)
(Aubrey Cohen, Seattle P-I, 06.16.2008)
(Eric Pryne, Seattle Times, 06.26.2008)
(Phuong Cat Le, Consumer Smarts (P-I Blog), 06.25.2008)
(Phuong Cat Le, Seattle P-I, 06.26.2008)
(Susan Kelleher, Seattle Times, 06.26.2008)
(Jillayne Schlicke, Rain City Guide, 06.25.2008)

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NWMLS Makes Some Changes for the Better

By The Tim on June 26th, 2008 at 9:09 AM · 76 Comments

A couple of changes were announced by the NWMLS this month regarding the way they interface their internal system with publicly-viewable sites. They have been covered by other local blogs, but I thought they would at least be worth mentioning here. If you spend a lot of time tracking individual local listings on sites such as Redfin or Estately, these changes may be interesting to you.

The first change is that homes with pending offers that previously remained visible on listing sites with the status of “Subject to Inspection” will now be taken completely off the market and all listing sites. If the deal falls through, they will go back on the market. It is not clear to me whether the MLS number for the home will change when this happens.

For the full scoop on this change, check out this detailed post from Jim Reppond over at RCG.

The second change is a welcome one, as it finally addresses the issue of false advertising that we have discussed here in the past. Previously, if a listing was taken off the market and re-listed, the “days on market” number shared by the NWMLS with public listing sites was reset to zero, even while the internal NWMLS database maintained a secret cumulative days on market statistic (CDOM) that indicated the true total time a home had languished on the market.

Starting next month, CDOM will be available for display on all the listing sites.  Additionally, the price history for listings will also be available (although this has been displayed on ZipRealty and Redfin for some time, they have been tracking it themselves, rather than grabbing it straight from the NWMLS database).

All in all, I think these are a series of good moves by the NWMLS, which continues to be one of the most open multiple listing services in the country.

For more information on these changes, check the links below:

(Jim Reppond, Rain City Guide, 06.02.2008)
(Jim Reppond, Rain City Guide, 06.19.2008)
(Aubrey Cohen, Seattle P-I, 06.23.2008)
(Elizabeth Rhodes, Seattle Times, 06.25.2008)

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Case-Shiller Tiers: Low Tier Barely Bounces

By The Tim on June 25th, 2008 at 10:17 AM · 31 Comments

Here’s our monthly look at Seattle’s price tiers from Case-Shiller. Remember that Case-Shiller’s “Seattle” data is based on single-family home repeat sales in King, Pierce, and Snohomish counties.

Now here come the graphs. First up is the straight graph of the index from January 2000 through April 2008.

Case-Shiller Tiered Index - Seattle
Click to enlarge

All three tiers benefited from the little spring bounce, but the low tier saw the smallest bump, moving up just 0.1% to the high tier’s 1.0%. As a result, there is now a difference of just 8.5 points between the low tier index and the high tier index. At its peak, the low tier’s index was 15 points higher than the high tier.

Here’s a chart of the year-over-year change in the index from June 2002 through April 2008.

Case-Shiller HPI - YOY Change in Seattle Tiers
Click to enlarge

Despite the bump, all three tiers extended their YOY declines in April. Here’s where they sit – Low: -7.4%, Med: -5.1%, Hi: -3.7%.

Lastly, here’s a decline-from-peak graph like the one posted yesterday, but looking only at the Seattle tiers.

Case-Shiller: Decline from Peak - Seattle Tiers
Click to enlarge

This graph really makes it easy to see how little the low end was bumped up in April. Even with the bump, the total decline from peak ranges from 6.1% for the high tier to 8.8% for the low tier.

I suspect that next month we will return to your regularly scheduled decline.

(Home Price Indices, Standard & Poor’s, 06.24.2008)

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Case-Shiller: Thrilling Spring Bounce in the NW

By The Tim on June 24th, 2008 at 10:08 AM · 47 Comments

As you may recall, a few months ago the NWMLS statistics for April showed a slight increase in prices (+2.0%) month-to-month. Well, the April Case-Shiller Home Price Index has been published, and surprisingly, they show an increase for April as well, but not nearly as much:

Up 0.7% March to April.
Down 4.9% YOY.

According to Case-Shiller, home prices in Seattle did get a slight spring bounce, and inched up slightly to “only” 6.6% below their July 2007 peak.

Here’s the usual graph, with L.A. & San Diego offset from Seattle & Portland by 17 months. Portland and Seattle seem to be moving in virtual lock-step for the last few months. Portland also saw a month-to-month increase in April. Both Northwest cities are performing worse than San Diego or L.A. were at this point in their downturn. This is most likely due to the financial crunch, which had not yet gained full steam 17 months ago.

Case-Shiller HPI: West Coast
Click to enlarge

And here’s the graph of all twenty Case-Shiller-tracked cities:

Case-Shiller HPI: All Cities
Click to enlarge

Here’s an update to the peak-decline graph, inspired by a graph created by reader CrystalBall. This chart takes the twelve cities whose peak index was greater than 175, and tracks how far they have fallen so far from their peak. The horizontal axis shows the total number of months since each individual city peaked.

Case-Shiller HPI: Decline From Peak
Click to enlarge

Again note that Portland and Seattle both had little bumps with the most recent data. However, even with the bump, Seattle has still declined more in the nine months since its peak than 10 out of the 11 other cities on the chart, including Portland. At this point in San Diego’s decline, prices were down only 1.2%, San Francisco was down 3.5%. Those cities have now seen a total decline of 28% and 25%, respectively.

Here’s the “rewind” chart. The horizontal range is selected to go back just far enough to find the last time that Seattle’s HPI was as low as it is now. This gives us a clean visual of just how far back prices have retreated in terms of months.

Case-Shiller HPI: Seattle Price Reversion
Click to enlarge

With the apparent “spring bounce,” the price rewind stayed steady in April at approximately 21 months.

Still no bottom in sight down in California, which means the “it won’t get as bad here” talk still doesn’t really have a baseline to compare with. I highly doubt that March was the bottom for Seattle. You can see that a number of other cities have bounced up and down on their way down to 20%+ declines, and that is probably all that’s happening here.

Check back tomorrow for a post on the Case-Shiller data for Seattle’s price tiers.

(Home Price Indices, Standard & Poor’s, 06.24.2008)

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