Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

18 responses to “Weekend News Roundup”

  1. Softwarengineer

    INTERESTING NEWS STORIES TIM

    I found the Escala Midby developer story the strangest. If Seattle were a Phoenix or an Orlando, there might be a tiny bit of logic to the allegations [but even Arizona/Florida are dead in the popped bubble too]; as retired folks with wealth may want to move to a nice climate, but who’s kidding who, Seattle in the winter [especially with no snow salt...LOL] is a dreary rainy place to make the retirees dream of sunshine and blue skies.

    The story would have had a spark of believability if unemployment hadn’t of devastated our state’s economy.

    I think there’s a lot of pink pony people that believe if even 50% of us have jobs, everything will be fine…LOL

    Rate this comment: Thumb up 0

  2. WestSideBilly

    If the Lexas guy would have inserted “affordable” somewhere in there, he may be on to something. Unfortunately they’ll probably build another building full of $400k studios and $700k 2BR condos that will sit empty.

    Rate this comment: Thumb up 0

  3. Kary L. Krismer

    I agree on the tax rebate issue. I’ve been against that being available at closing all along.

    On the Smith Tower it sounds like they’re trying to keep their options open. A two year lease isn’t going to be very attractive to a lot of businesses.

    As to Smartmoney.com–pretty amazing they have to cite statistics from March. You’d think they were a monthly news magazine.

    Somewhat related, the tax appeal issue is a bit late too. They’re just now sending out 2010 assessments. My 2009 was way too high, but 2010 is significantly lower–over 15% lower. It’s too late to appeal 2009 for everyone, I think.

    BTW, I didn’t appeal 2009 because it wasn’t worth it to save $500. I almost did it just for the experience, but that was my only real motivation to do it.

    Rate this comment: Thumb up 0

  4. S-Crow

    If people wish direct links to forms for appealing vs. navigating through county websites to get to those forms they can download the forms directly from our website (pdf format). I posted the links on June 26th for King, Snohomish & Pierce Co. Click here

    Rate this comment: Thumb up 0

  5. Sniglet

    Actually, I am suprised that only 47% of the foreclosures looked at in the WSJ study had negative equity. Why would any home ever wind up in foreclosure if there was actually equity? If a home-owner has equity they can always sell and avoid foreclosure.

    There may be a few cases where struggling home-owners don’t have a clue, or have psychological issues which prevent them from taking the necessary action to avoid foreclosure by selling (like the lady in the movie “House of Sand and Fog”), but that would be a very SMALL portion of struggling home-owners.

    I wonder if the number of foreclosed homes with negative equity aren’t being under-reported somehow? it’s not like it is obvious whether a home has negative equity, not until you sell it. We know that many lenders have large REO inventories, which they are often trying to seel (unsuccessfully) at unrealistic prices. Perhaps the number of foreclosed properties with negative equities is so low because lenders refuse to acknowledge the write-downs for their unsold REO inventory. Also, I wonder if they are counting second mortgages, or are only looking at whether there is enough equity to cover the first mortgage?

    Rate this comment: Thumb up 0

  6. Kary L. Krismer

    RE: Sniglet @ 4 – Procrastination is a common trait of people in financial trouble. Back in my attorney days having people call the day before a foreclosure was fairly common.

    Even before 7/07, only about 10% of the homes with significant equity were listed with the NWMLS prior to the sale date.

    Rate this comment: Thumb up 0

  7. Sniglet

    Let’s put it another way. If lenders are buying back something like 90% of the properties going up for foreclosure auction at the country courthouse (which I hear is the case across most of America) I find it extremely hard to believe that many of those homes they are buying back have equity. Why not just take the offer from a low-ball investor at the auction if the price on offer at least covered the mortgage? There is absolutely NO incentive for lenders to buy back properties at foreclosure auctions and list them as REOs if they can be made whole at the initial auction.

    By contrast, several years ago only a tiny percentage of homes were ever bought back by lenders at foreclosure auctions. When homes have equity banks don’t even bother bringing them into their REO inventory.

    Rate this comment: Thumb up 0

  8. Kary L. Krismer

    RE: Sniglet @ 6 – There are fewer people making low ball offers on the eve of foreclosure. Flipping isn’t that common right now. Also, locally there are still distressed property law concerns for such people.

    Rate this comment: Thumb up 0

  9. deejayoh

    RE: Sniglet @ 4 – I had a different intepretation of the results. The author was trying to isolate the main cause of the foreclosure. His conclusion was that in 47% of cases it was negative equity. there could have been negative equity in other cases but his conclusion was that another factor Ie.g. job loss, interest reset) was the driving factor

    Rate this comment: Thumb up 0

  10. ray pepper

    The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house — that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.

    Simply shocking news! They will walk! Boy will they walk!! In numbers we still cannot even imagine!

    Mtg Cramdown? Where are you??

    ***********************

    Cease and desist order on Lynnwood bank?…Well now they can join all the others with cease and desist orders. Unless I’m mistaken the following also have the same orders:

    Venture
    Sterling
    Banner
    RPFG
    Everett Bank

    The little guys better find financing quick………..which they won’t…
    They better find a merger consortium quick….which they can’t…
    Thus we say good bye to Venture, Banner, Sterling, and a bevy of others in the next 12 months..

    Have you seen the amount of CASH these banks have left to cover for BAD LOANS? They need a market turnaround within 90 days…..

    Don’t take it from me look at their pps. STSA, BANR, RPFG…Turn out the lights and see you all at CHASE!

    Rate this comment: Thumb up 0

  11. Kary L. Krismer

    By deejayoh @ 9:

    RE: Sniglet @ 4 – I had a different intepretation of the results. The author was trying to isolate the main cause of the foreclosure. His conclusion was that in 47% of cases it was negative equity. there could have been negative equity in other cases but his conclusion was that another factor Ie.g. job loss, interest reset) was the driving factor

    It’s been a while since I looked at that, so I don’t recall the specifics. But what they’re trying to do is highly suspect. They think you can tell from payment records why a foreclosure occurred. For example, they think that if the payments just suddenly stopped, that that would be a walk-away type situation. I think that’s a very questionable assumption.

    Also, this has sort of been touched on in the reverse, but someone with equity has more options. So it’s not surprising you’d see a lot of houses that actually get foreclosed have negative equity. If short sale or deed in lieu are your only options, you might as well start spending your mortgage money on lotto tickets, because the odds would probably be better.

    Rate this comment: Thumb up 0

  12. Sniglet

    There are fewer people making low ball offers on the eve of foreclosure. Flipping isn’t that common right now.

    Sure, flipping is not as common as it was, but I believe this is primarily because it is exceedingly difficult to find a home at foreclosure auction that has any equity. I have read many articles about foreclosure auctions, where the participants complained about how the lenders just buy back all the properties and won’t let them sell for realistic prices.

    If there really was any significant amount of equity in the homes going up for foreclosure auction, I am quite certain that private parties would be buying them. Which leads me back to my earlier point: banks wouldn’t be buying back properties at foreclosure auction and adding them to the REO inventories if there was actually equity.

    Rate this comment: Thumb up 0

  13. patient

    Someone made a comment a cuple of days ago of the number of NTSs for June to the note that they will pretty much keep of with the number of closings. Is the number of NTSs for June official at this time?

    Rate this comment: Thumb up 0

  14. patient

    RE: The Tim @ 14 – Thanks Tim, wow that’s close.

    Rate this comment: Thumb up 0

  15. nancy

    RE: ray pepper @ 10RE: ray pepper @ 10

    Ray – I believe you are mistaken. There is no documentation of any Cease and Desist order against either Sterling or Banner Banks.

    Rate this comment: Thumb up 0

  16. Frank

    I thought this piece was a pretty effective refutation of the WSJ opinion piece. Tim, you’re usually pretty skeptical of the media’s coverage of the real estate sector, I’m curious why you put so much stock in (of all things!) a Wall Street Journal op-ed?

    Rate this comment: Thumb up 0

  17. ray pepper

    RE: nancy @ 16

    Yes you are correct..

    Venture and Homestreet Bank. I don’t bank at any of these banks I just read the press releases from the PSBJ. I suspect they will all meet the same fate. COLB appears to be holding up this month OK. I will be fascinated to see how these smaller banks survive with their current cash on hand. If they can sustain, and turn it around, WOW you will have a great long position at these entry points.

    Rate this comment: Thumb up 0

Leave a Reply

Do you want a nifty avatar picture next to your name, instead of a photograph of Tim's dog? Just sign up with Gravatar, and make sure to use the same email address in the form below. It's that easy!

Please read the rules before posting a comment.

You have 5 comments remaining on this post.

Archives

Find us on Google+