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.

35 responses to “Foreclosures Still Slowly Climbing Around Seattle”

  1. Ira Sacharoff

    It’s interesting to me how the very same statistics can be spun in different ways. For example, the headline here reads ” Foreclosures still slowly climbing…”, but you can be sure that if this were a NWMLS press release, it might read “Foreclosures Declining Around Seattle”, and both headlines would be correct. Since the NTS January YOY numbers show a decline from 8-19% depending on the county, one could easily spin that to make it look like the “deadwood” is being cleared out and we’re approaching a more “normal” market.
    At the same time, NTS numbers are up over the last six months, so one could easily spin that to make it look like we’re clearly not out of the woods yet-, that we may have seen a clearing and a patch of daylight, but have no idea how to find our way back to the road.

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  2. softwarengineer

    I Enjoy Your Refreshing News Take Tim

    You put our current 26 month recession/depression data in a pragmatic light, using 2006/2007 as the only real base year(s) to measure an improvement; while month to month +/- changes in the 2008/2009/2010 quagmire don’t mean a thing, when you’re stuck in a swamp of foreclosure mud up to your hips, no matter what the minor/innocuous change.

    Its very similar to unemployment too, the MSM spouts today the 440K that filed for unemployment isn’t horrifying, it was better than we thought….LOL…that is, if the phony government BLS unemployment data doesn’t have a historical/documented 30% underestimated error factor embedded in it, like 2009….LOL

    Its like saying the guillotine lopped off my head, but it was good news, it left more neck this swipe….LOL

    BTW, with the almost 2 million unemployed BLS underestimated since last March….when are we gonna get a revised unemployment rate? Our government BLS sounds like Toyota stalling since 2002 on the gas pedal recalls…LOL

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  3. Jeremy

    I’m getting an error when trying to view the graphs.. it says “Session expired. Please refresh.” Refreshing my browser doesn’t fix it.

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  4. AMS

    “King County came in at 1 NTS per 961 households, Snohomish County had 1 NTS per 596 households, and Pierce had 1 NTS for every 574 households (higher is better).”

    Yes, higher is better in my Church of Real Estate, as that indicates fewer NTSs.

    Those who are looking to buy trustee sale property might seek a better selection, so for them, lower might be better.

    Much like the question of an ideal unemployment rate, an interesting question might be what is the ideal level of activity for those who seek to buy homes at the trustee sales. Certainly a abundant supply pushes prices lower, but if the supply is abundant for too long, then prices may be pushed even lower.

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  5. Ray Pepper

    We will continue to see foreclosures increase over the years to come. However, all these new “Owner Bonus” plans being rolled out that if you are underwater you will receive a % off your Principle reduced at the end of 2 years will “sucker” many people into making payments on their upside down asset thus further delaying the inevitable short sale.

    A client emailed me the New Wachovia (Wells Fargo) $5000 seller incentive to short sale the home. He hasn’t made a payment in 13 months and is upside down about 100k plus the costs to sell. I will email it to you Tim.

    Get this It starts out like this:

    1. The sale closing must be completed within 60 days of receipt of this letter then Wachovia will agree to a 5000 seller incentive to be included as a credit on the HUD-1. It goes onto say on # 7 that it may be extended once its approved however, there are so many restrictions in getting this 5k that I doubt anyone will ever collect.

    2. Then even worse: The short sale may result in a deficiency balance that may be required to be paid off at closing….

    It just gets worse as you read on with so many restrictions but I love the Title: HURRY-to take advantage of this short sale seller incentive the closing must take place by April 9 and it goes on to dictate how you cannot sell the home to friends or relatives.

    Good God! Every investor I know that has chosen to short sale their property in Nevada has sold it to a friend, fellow investor, or “distant” family member. If they didn’t it was foreclosed on already and guess who was there at the auction bidding…You got it…An LLC with a “principle” who knew the property quite well.

    The banks are grasping at tooth picks with their butt cheeks trying to cut losses any way they can.

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  6. Ira Sacharoff

    RE: Ray Pepper @ 6
    I agree with Ray. I don’t see foreclosures decreasing. The commercial RE market is going to see a pretty significant decline, and that’s going to spill over into the residential market.

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  7. AMS

    RE: Ira Sacharoff @ 7 – “I don’t see foreclosures decreasing. The commercial RE market is going to see a pretty significant decline, and that’s going to spill over into the residential market.”

    Are you saying that residential foreclosures are not going to decrease or increase, and thus will remain fairly constant, within a normal band?

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  8. Ira Sacharoff

    RE: AMS @ 9
    No, I think they’ll pick up the pace and increase, as soon as the commercial chocolate starts hitting the fan.

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  9. AMS

    RE: Ira Sacharoff @ 10 – Oh, maybe you meant: “The commercial RE market is going to see a pretty significant INCREASE, and that’s going to spill over into the residential market.”

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  10. Ira Sacharoff

    RE: AMS @ 11
    Picky, picky. I meant that the commercial RE market would see a pretty significant decline, not a decline in foreclosures.

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  11. EconE

    I’m not sure if this problem can be solved by your Church of Real Estate, AMS.

    No, I have not lost faith, but I fear that we will need to convene with the Church of Debt.

    The COD has many great groups and seminars such as…

    “Holy Rollers for HELOC” night.

    “You can’t pick your God but you CAN pick-a-payment”

    “Waving your arms for Option-ARMs”

    “The higher the pile (of debt) the closer to God”

    “Yay Debt!”

    And my personal favorite…

    “Gimme gimme gimme”. (This is the one where FREE pre-approved credit card applications rain down from above)

    We take Saturdays off (for shopping of course) and our Sunday service is always titled…”Money…who needs it anyways!” (That’s the service where we pass around the offering plates)

    It’s not free to join, but we do have a convenient payment plan.

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  12. AMS

    RE: EconE @ 13 – I can see the possibilities here. I’ll have my people get in contact with your people. I am sure we both have a goal of a mutually better world.

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  13. softwarengineer

    RE: EconE @ 13

    LOL

    You should ghost write for Stephen King….

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  14. patient

    If I’m not wrong there was a bundle of holiday foreclosure moratoriums extending into January from at least Fannie, Frannie and Citigroup. That could possibly make the numbers look a bit better than they really are. I’ll guess we’ll know by next month.

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  15. Jeremy

    RE: The Tim @ 8 – I was using Firefox 3.5.7. It looks fine in IE. I get the same error in Firefox 3.6.

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  16. Futurist

    The level of control by the President’s Working Group on Financial Markets (created by Executive Order 12631) is almost omnipotent and complete, so much so that the market fundamentals do not matter anymore. The Working Group will make the markets dance to their liking, to achieve whatever end results they have in store. You can do all the analysis you like, but the numbers do not matter anymore. The Working Group coordinates with all the central banks worldwide.

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  17. Mikal

    RE: Futurist @ 18 – There is a fifth dimension, beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition and it lies between the pit of man’s fears and the summit of his knowledge. This is the dimension of imagination. It is an area we call…..the Twilight Zone.

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  18. Scotsman

    RE: EconE @ 13

    So, will Fannie, Freddie, and Timmy G. be the new holy trinity?

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  19. EconE

    RE: Scotsman @ 20

    It depends what “level” you make it to.

    I’m thinking a more appropriate trinity for our “flock” would be Charles E. Dederich, Werner Erhard and Reverend Sun Myung Moon.

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  20. David Losh

    RE: Futurist @ 18

    You’ve brought up Reagan era legislative tools before. It’s a good thing to remind people how the economy got off track. The thing to remember is that trickle down thingy never worked out.

    We moved ahead economically with the promise that if we loosened regulations, gave tax breaks, and protected American business interests, we would have prosperity. We got Wal Mart instead.

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  21. Scotsman

    RE: EconE @ 21

    Ouch! You’re harsh!

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  22. Ross Bunker

    RE: Jeremy @ 17 – Jeremy, thanks for the report. It turns out to be related to the cookies we’re using to enable the interactivity. In order to see it right now, you have to allow third-party cookies (IE does, FF doesn’t by default). We’re working on a fix so that you won’t have to. Stay tuned.

    Ross Bunker
    Tableau Software

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  23. shawn

    RE: Futurist @ 18 – What I like best about you is that you like SWE and find SWE to be making sense.

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  24. Gilly

    Not working in IE8. No graphs: that section says “the webpage no longer exists”.

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  25. David Losh

    RE: Futurist @ 18

    There was a program tonight on channel 9 at 9PM about the derivative trading activities that have lead to our financial melt down. It did mention the Working Group as preventing derivative trading regulation in the 1990s.

    It’s good that you bring up these points because most people live in a little world of limited knowledge.

    At one point in tonights program they do refer to the math formulas that have made derivative the $500 trillion dollar industry that it is today. It’s all just math, charts, and graphs of borrowed money insured by debt.

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  26. ARDELL

    Back to the post topic, foreclosures and such, I am doing stats by school district. Finished Lake Washington School District today and checked the Short Sales and Bank Owned properties as part of the mix in the last three months.

    http://www.realtown.com/Ardell/blog/tracking-the-market/lakewashingtonhomeprices

    In the graph in the link you will see median price per square foot for 2009 through Jan 2010 for homes sold under $500,000 (about 50% of all homes sold)

    11/09 $206 mppsf included 9 short sales and 4 bank-owneds of 104 total sales
    12/09 $219 mppsf included 11 short sales and 11 bank-owneds of 79 sales
    01/10 $224 mppsf included 2 short sales and 7 bank-owneds of 47 sales

    Pre and Post foreclosures in the mix doesn’t seem to reduce the mppsf paid. Same thing happened when I checked earlier this year. The “distressed” property sold for higher per square foot than the non-distressed property in Bellevue. Not sure why that is.

    Even with 20% of the total sales being “distressed property” in January, the mppsf was up from November when they were 12% of the total sales.

    Anyone have a guess as to why that is?

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  27. David Losh

    RE: ARDELL @ 28

    Huh?

    All the charts, graphs, and math mean absolutely nothing. There is nothing in there that is remotely predictive, or of substance to the value of housing units or Real Estate.

    All of this talk about toxic loans, or over valued assets are a small blip in the financial sector. The only statistics that matter are what people can afford. Can people, with unemployment, wage deflation, and falling net wealth afford to over pay for housing?

    The futurist commenter has brought up much more substance on the subject of housing unit pricing. We just forgot how we got here.

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  28. Ira Sacharoff

    RE: ARDELL @ 28
    I’ll take a stab at it. Maybe the short sale and bank owned homes you looked at in the Lake Washington district were smaller? Just a wild guess. But smaller homes tend to sell for more per square foot, so that may skew the numbers. Had you only included homes of comparable size, it might be more insightful.

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  29. Brad

    I wonder how much shadow inventory is around Seattle – where banks aren’t even reporting mortgages as delinquent, just sitting on them. I know I have an open short sale offer on a place where the owners haven’t made a mortgage payment since September – but county records show no Notice of Default yet, well over 120 days later. Just one anecdote – but is there *any* way to get accurate data if banks aren’t reporting? How bad are things, really?

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  30. ARDELL

    David,

    The total population is not buying homes, so the median income of home buyers is of more significance than the median income of the population as a whole. Do the median income numbers include part time students and other part time employment? i.e. people not in the home buyer market?

    “fundamentals” of who will buy a Ferrari this year would not include the median income of the general population. Same goes for high end housing units.

    I’ve stripped the data down to the level of 50% of homebuyers and 87% of homebuyers, excluding portions of the data that impact only 12% or so of homebuyers who are buying at a price of over $750,000.

    What is (data) is more important to study than what we may think it “should” be based on fundamentals. What people are actually doing (data) is more important than what they are not doing in large numbers.

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  31. AMS

    RE: ARDELL @ 32 – “…the median income of home buyers is of more significance than the median income of the population as a whole.”

    What’s the difference, as measured in both dollars and percent, between the median income of the general population and the median income of home buyers? Also which one is more?

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  32. ARDELL

    Thanks Ira,

    I pulled the post back in to “draft mode” and will double check everything. Something looks out of whack. I’ll test it against Bellevue, Issaquah and Northshore School Districts before I bring it back out with all of the School Districts. That will give me a quadruple check on the data and influencing factors as to short sales and bank owneds in the mix.

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  33. Jackson Wallace

    The news this week globally is that we are going over the next cliff of the waterfall. Europe is sinking under debt, China is slowing deliberately, to deflate their own bubbles or who knows why, and US treasury aucitons are starting to go south, which means the govt can only spend so much and we’re going down further into deflation. I’m looking at houses every week, and more homes under 200k are showing up in the crummy areas, and nothing is firm in the mid to top tier. Thigs still sell, but that wont last long after people sniff that the economy really isnt coming back. Yes, VIrginia, there is a depression…

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