About 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.

24 comments:

  1. 1
    Pegasus says:

    FICO Enhances Ability to Predict Strategic Mortgage Defaults

    FICO, the leading provider of analytics and decision management technology, today announced an analytic advance that substantially improves lenders’ ability to identify borrowers at risk of strategic default on mortgages. The company is consulting with top mortgage lenders to provide custom analytic solutions for their mortgage portfolios, allowing them to take preventative action and reduce the costly impact of strategic defaults.

    Lenders have traditionally used the degree of home price depreciation as a basis for predicting strategic defaults; however, new FICO Labs research indicates that borrowers whose houses have lost the most value are only twice as likely to default as those whose houses have lost the least value. Through the use of custom analytic models, FICO Labs researchers have demonstrated the ability to identify borrowers who are over 100 times more likely to default strategically than others.

    http://www.fico.com/en/Company/News/Pages/04-21-2011.aspx

  2. 2
    Pegasus says:

    Almost half of housing market is now distressed properties

    The HousingPulse Distressed Property Index (DPI), a key indicator of the health of the U.S. housing market, rose to 48.6 percent in March – the second highest level seen in the past 12 months.

    The HousingPulse DTI indicated that nearly half of the housing market is now distressed properties. This trend is likely to continue as a backlog of foreclosures and mortgage defaults make their way through the housing pipeline.

    http://www.calculatedriskblog.com/2011/04/march-survey-almost-half-of-housing.html

  3. 3
    Kary L. Krismer says:

    RE: Pegasus @ 2 – I would suspect that number is low, considering the number of houses in just CA, FL and AZ, and the status of those markets.

  4. 4
    Kary L. Krismer says:

    RE: Pegasus @ 1 – From the article: “In addition, FICO Labs researchers have found that, as a group, strategic defaulters tend to be more savvy managers of their credit than the general population, with higher FICO® Scores, lower revolving balances, fewer instances of exceeding limits on their credit cards and lower retail credit card usage.”

    At first this seemed backwards, but then I realized what they are trying to find is those who default when they can pay. The rest of them cannot afford to pay all their debts because they have so much credit card and other debt. So yes, someone with less debt is more likely to be a strategic defaulter, because someone with more debt is more likely to be a non-strategic defaulter.

    I sort of wonder whether this is more of a tool to see which debtors to pursue to collection in states where a deficiency is easier to obtain?

  5. 5
    ChrisM says:

    RE: Kary L. Krismer @ 4 – I, too, read the article and was wondering what the intent of the article is. Basically, they’re saying those with good credit and low credit card debt who have recently bought an overpriced house are a financial risk?

    Does that mean lenders will want to run a REALLY good appraisal before approving a sale going forward if the buyers have good FICO scores? And maybe, OTOH, they don’t need to worry about the deadbeat buyers walking away?

    IMO the article doesn’t make sense.

  6. 6
    Kary L. Krismer says:

    RE: ChrisM @ 5 – Fico doesn’t make sense, unless you’re a credit card issuer.

  7. 7
    Blurtman says:

    RE: Kary L. Krismer @ 6 – I’ve always had issues with organizations that collect and sell data about you without your permission, especially when that data can be used to deny you access to goods and services, or drive up their cost, especially when the organization takes no responsibility for the data’s accuracy, and expects the subject to prove and correct and mistakes.

  8. 9

    RE: Blurtman @ 7 -Good Point Blurtman

    A good example is auto insurance, your FICO score determines your auto insurance rates in the State of Washington, to a significant degree too…..Hades, even the workers at PEMCO I spoke to thought it was a joke too, like why is bad driving related to bad credit? Or even worse, someone just lost their good job and is flipping burgers now with a poor FICO score, so we’ll have to raise their aouto insurance rates to bankrupt the poor worse too.

    I voted against the Insurance Commissioner incumbant on this issue alone….LOL [BTW, the current Insurance Comissioner won’t lift a finger against Acer Computer for not honoring their warranties, when Circuit City, their warrabty return center, went out of business….vote him out too, LOL].

    One good thing, if you need your current year’s credit rating, just call your auto insurance company…they’ll easily give it to you over the phone….LOL

  9. 10
    CrankyPanky says:

    1988 prices baby top song Guns N’ Roses – “Sweet Child ‘O Mine
    http://www.redfin.com/WA/Lake-Stevens/1811-94th-Dr-SE-98258/home/2700850

  10. 11

    RE: CrankyPanky @ 10

    The Condos In Des Moines [not far from the Red Robin] Went Down in Price 25%

    They were $100K….now they’re $75K, about a month later….a big sign advertises the MASSIVE drop in Des Moines’ condos’ prices….LOL

    More to come in my book, a LOT more to come.

  11. 12
    The Tim says:

    By Snigliastic @ 8:

    1) Is negotiation strategy the same for short sales, or is it easier (more successful) to be more aggressive?

    Don’t know the answer to #2, but as for #1, funny you should bring that up. I’m working on a post for the Redfin blog that looks at just that question. In short, the answer is no. Short sales and bank-owned homes (on average) tend to sell for closer to their (final) list price than “non-distressed” sales.

    On the other hand, in the Seattle area they also tend to sell for further from their original list price than non-distressed sales. In other words, banks pretty much suck at pricing homes (both REO and short sales), but that doesn’t mean they’re going to negotiate.

  12. 13
    Blurtman says:

    RE: softwarengineer @ 9 – Fair Isaacs and their ilk are blood suckers who are screwing with folks’ lives to make a buck. They are the ones selling correlations to unrelated industries like auto insurers. I recall years back Bernie Sanders tried to pass legislation making these companies more accountable. Shot down.

  13. 14
    Blake says:

    Recommended reading…
    The Bipartisan March to Fiscal Madness
    By DAVID A. STOCKMAN
    Published: April 23, 2011
    http://www.nytimes.com/2011/04/24/opinion/24stockman.html?wpisrc=nl_wonk&_r=1&pagewanted=all
    -snip- With the central banks no longer ready to buy, the Treasury market will once again be driven by real investors — many of them likely to demand higher interest rates owing to the heightened fiscal risks recently highlighted by Standard & Poor’s. Ominously, the biggest and baddest of these real investors, the quarter-trillion-dollar Pimco Total Return Fund, has already thrown down the gauntlet by selling Uncle Sam’s paper short.
    INTEREST rates have been falling for 30 years, but Pimco’s short call could well mark a generational reversal…
    -end quote-

    ** If and when interest rates start rising all bets are off on the housing market… and the US economy!
    (I just locked in for 30 years at 4.8%. I asked my loan officer: “If it was YOUR money, would you loan it to me for 30 years at 4.8?” …he said no way! My first mortgage 20 years ago was over 8%)

  14. 15

    RE: Blake @ 14

    Spoken Like a True Bankster

    Should of also asked him why in Hades should I save MY money in your bank for zero some percent, if you wouldn’t loan it out for a mortgage under 8%….LOL

  15. 16
  16. 17
    pfft says:

    By Blake @ 14:

    ** If and when interest rates start rising all bets are off on the housing market… and the US economy!

    if if if.

    boring.

    what’s makes people think Gross is right or even an expert?

  17. 18

    By Snigliastic @ 8:

    Couple questions I have been wondering about for awhile:

    1) Is negotiation strategy the same for short sales, or is it easier (more successful) to be more aggressive?

    2) How do normal realtors deal with reduced-rate competitors like Redfin or Ray? Are most realtors willing/able to rebate a portion of fees, and is asking an insult?

    On #2…It never hurts to ask. Plenty of “traditional” real estate agents are willing to rebate some of their commission, especially if it’s a relatively uncomplicated deal. Who cares if they get insulted? It’s not like you’d be insulting Mother Theresa:)

  18. 19

    The Parts and End item Inventory Drying Up In Earthquake/Radiation Distressed Japan, Impacts Seattle Area Significantly

    Article in part:

    “…Toyota’s car production in Japan plummeted a staggering 62.7% in March due to a parts supply crunch following the earthquake and tsunami….”

    Another alarming statistic for the Seattle area’s car dealers cuts to the local economy, a HUGE consumer base of Japanese cars, article in part:

    “…Toyota gets more than 90 percent of its auto components in Japan, according to Saito….”

    http://seattletimes.nwsource.com/html/businesstechnology/2014715537_apasjapanearthquakeautomakers.html

    http://www.usatoday.com/money/autos/2011-04-25-Toyota.htm

    Imagine April’s Numbers and from the day of the earthquake March 11-March 31 2011: it represents about 64% of the month of March 2011 too

  19. 20
    Blake says:

    By pfft @ 17:

    By Blake @ 14:

    ** If and when interest rates start rising all bets are off on the housing market… and the US economy!

    if if if.

    boring.

    what’s makes people think Gross is right or even an expert?

    People listen to Gross because he’s been right a lot and is an expert in his field: fixed income. he also manages the largest bond funds int he world…

    And.. no, definitely not boring… considering what might happen if interest rates go up in the next few years is quite interesting. (Better than thinking about what our budget might “cost” in 75 years…) Stockman notes that we’ve had 30 years of declining interest rates. It’s stupid to think this may continue and not consider the alternatives…

    I think Gross may be wrong in the short term (I sold all my PIMCO funds recently), but my statement about the effect of rising rates is noncontroversial. We are lucky that the Europeans have a sovereign debt crisis, because otherwise the dollar would be falling even more and rates would be going up.

    Note: Here’s the main reason rates may stay low longer… not really “good”
    http://www.bloomberg.com/news/2011-04-24/gross-s-bearish-treasury-bet-clashes-with-dealers-seeing-scope-for-rally.html
    -snip- “Increased downgrade risk doesn’t necessarily imply increased Treasury yields,” Goldman Sachs economists led by Jan Hatzius in New York wrote in an April 19 report. “A significant push toward fiscal austerity would lead to lower growth and lower growth would lead to easier monetary policy for longer.”

    “Lower growth…” heh heh… what does this mean to the 60-70% of Americans who have seen “no growth” lately??

  20. 21
    Blake says:

    This is simply common sense…
    http://blogs.ft.com/economistsforum/2011/04/don’t-let-banks-gamble-with-taxpayer-money/
    … but it seems that our political system is still too corrupt to change it! The Big Boys are still gambling and will be bailed out again.

  21. 22

    RE: Blake @ 20

    Heh….Heh….Blake

    The bottom 80% of household incomes, even the bottom 95% applies; don’t matter anymore in a globalist economy, the top 80-95% household income group [about $80K on up] make too much money and if a single income, tend to be older and more experienced workers….lay them off with no hope and force retire ’em all early. LOL

  22. 23
    deejayoh says:

    RE: softwarengineer @ 19 – I went to look at that new Lexus Hybrid (CT200H) last night. The dealer told me they are out of stock until at least July

    I have no idea why they still have an ad blitz on for that thing

  23. 24
    pfft says:

    By Blake @ 20:

    By pfft @ 17:

    By Blake @ 14:

    ** If and when interest rates start rising all bets are off on the housing market… and the US economy!

    if if if.

    boring.

    what’s makes people think Gross is right or even an expert?

    People listen to Gross because he’s been right a lot and is an expert in his field: fixed income. he also manages the largest bond funds int he world…

    And.. no, definitely not boring… considering what might happen if interest rates go up in the next few years is quite interesting. (Better than thinking about what our budget might “cost” in 75 years…) Stockman notes that we’ve had 30 years of declining interest rates. It’s stupid to think this may continue and not consider the alternatives…

    I think Gross may be wrong in the short term (I sold all my PIMCO funds recently), but my statement about the effect of rising rates is noncontroversial. We are lucky that the Europeans have a sovereign debt crisis, because otherwise the dollar would be falling even more and rates would be going up.

    Note: Here’s the main reason rates may stay low longer… not really “good”
    http://www.bloomberg.com/news/2011-04-24/gross-s-bearish-treasury-bet-clashes-with-dealers-seeing-scope-for-rally.html
    -snip- �Increased downgrade risk doesn�t necessarily imply increased Treasury yields,� Goldman Sachs economists led by Jan Hatzius in New York wrote in an April 19 report. �A significant push toward fiscal austerity would lead to lower growth and lower growth would lead to easier monetary policy for longer.�

    “Lower growth…” heh heh… what does this mean to the 60-70% of Americans who have seen “no growth” lately??

    bill gross has made plenty of bad calls, including one or two this year already.

    “Stockman notes that we’ve had 30 years of declining interest rates. It’s stupid to think this may continue and not consider the alternatives…”

    30 years ago everyone though rates would go even higher. why is 30 years the end? why not 10 years? why not 20?

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