Posted by: 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.

32 responses to “Foreclosures Dip Just a Bit in April”

  1. Bingo

    It would be great news for the Real Estate market if foreclosure pressure is abating, however, RealtyTrac seems to think the dip is due to processing delays. I guess time will tell.

    http://www.housingwire.com/2011/05/11/delays-push-foreclosures-to-40-month-low-in-april

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  2. Yakima_Hick

    Uh oh.. Foreclosure activity is down 30% YoY in King County. Inventory is significantly down, sales are up, bidding wars are occuring everywhere, Sellers are not in a mood to sale. What is this mean? ‘Yo all miss the bottom. BOOOOOYAAAAAAAAAAHHHHHHHHH!

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  3. David North

    I believe the April dip is more likely due to the new legislation and some banks pausing briefly to be sure their processes conform, than anything else.

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  4. Scotsman

    Most likely it’s because banks are busy defending themselves in court and overwhelmed by the sheer volume of stuff they have to process. Not to mention that given the uncertainty about their own financial solvency, many are not in a rush to book additional losses.

    The last thing this means is that we’re near any kind of a bottom.

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  5. softwarengineer

    RE: Bingo @ 1

    I Agree With You

    Article:

    “….Foreclosure Activity Drops Sharply In April
    But that doesn’t mean things are getting better, analysts say…”

    http://www.consumeraffairs.com/news04/2011/05/foreclosure-activity-drops-sharply-in-april.html

    IMO, the paper-pusher foreclosure bureacrats are subpar and lazy…they’re takin a breather [good gosh they actually have to work for a living....LOL].

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  6. softwarengineer

    RE: softwarengineer @ 5

    Another Good Reason to Fear More Seattle Foreclosures This Year

    Boeing’s 2011 A/C sales rate is running about 66% of last year through April 2011.

    http://seattletimes.nwsource.com/html/localnews/2015035797_apusboeingorder.html?syndication=rss

    http://seattletimes.nwsource.com/html/businesstechnology/2013860799_boeing07.html

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  7. softwarengineer

    RE: softwarengineer @ 6

    How About MSFT Q1 2011 Sales?

    Same sort of bad local news, but not as bad as Boeing.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/04/13/businessinsider-trouble-for-microsoft-pc-market-tanks-in-q1-2011-4.DTL

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  8. Kary L. Krismer

    By Scotsman @ 4:

    Most likely it’s because banks are busy defending themselves in court and overwhelmed by the sheer volume of stuff they have to process..

    Volume may be likely–they’re maxed out, but court is unlikely in Washington.

    I agree w/ David North that it’s possibly the result of the new legislation. Some of it does apply right away and so it is possibly having an effect on what they can do. I’d have to look at the effective date provisions to be sure, but at some point we’d effectively have about a 30-60 day delay that has to work it’s way through the numbers somehow.

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  9. drshort

    Just for clarification, there were not 912 properties in King County recieving a NTS in April. There were 912 owners receiving a notice. For example, if a husband and wife own a home, that will create 2 notices of trustee sale on 1 property in King County records. My guess is that there was somewhere around 500 – 600 propeties in King County getting an NTS.

    Warranty deeds work the same way which is why there always significantly higher than the close sales.

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  10. Kary L. Krismer

    RE: drshort @ 9 – I’d have to think about that, and play around with the recorder sites. I know there are ways you can search and get double results, but I think there are also ways you can search and not have that happen.

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  11. S-Crow

    RE: drshort @ 9 – I don’t believe that to be the case. There are not two Notices of Trustee Sales recorded on a single parcel when you have two people (Grantors under the DOT). There is one recording. Otherwise you would search under each persons name and find a separate recorded documents.

    Side note: if people are interested in a particular parcel that they suspect may be in some stage of pre-foreclosure one way is to search if there has been a Notice of Successor Trustee recorded. Typically this is the precursor to a formal NTS recorded. This is not always the case (as in DOT’s being reconveyed) but I’ve seen it many times.

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  12. Kary L. Krismer

    RE: S-Crow @ 11 – I think what he’s saying though is you can get two hits.

    If you search for Smith, you will get Susan Smith and John Smith separately, even though they are married and it was only one notice. But I don’t think that necessarily means that if you search without a name at all, but instead by date, that you’d get two hits for them. As I said before, I’d need to check that out.

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  13. Drshort

    Ok… I was wrong. Kary is right. You only get multiple hits if you include name or something else to match on.

    Nevermind!

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  14. karl

    starting to see an increase in listings. Some, if not most of them are in pretty rough shape. Good to see a few coming out of the shadow

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  15. karl

    It doesn’t seem like good business sense for the 2nd lien holder to file an NTS if the holder of the first did also. The money spent on legal costs would be throwing good money after bad since the 1st lien holder gets paid 1st .

    I guess if the holder of the 2nd managed to forclose first they could set the price where they may recoup some of their investment.

    what would the advange be of both filing?

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  16. Kary L. Krismer

    RE: karl @ 16 – You don’t see that many 2nd mortgages foreclosing now because they know they have no equity. Four years ago they would almost always foreclose, which effectively let the homeowner off the hook for all the debt because that foreclosure would wipe out the second and the second (or the purchaser at their sale) would take over payment on the first.

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  17. No Name Guy

    RE: softwarengineer @ 6

    Doesn’t matter there SWE on orders this month, at least for this year’s employment. Look instead at the production rates and back log. If sales are off for one month, or one year for that matter….meh. The aerospace business works 2-4 years ahead. I’ll leave it to you to research the current production rates and what the news releases are on future rates (hint – they’re increasing, which translates to more assembly mechanics and more manufacturing engineers).

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  18. David S

    RE: karl @ 14 – I’m starting to see a number of short sale and bank owned properties close for really low selling prices recently. Too bad these can’t be used as comps against non-distressed property.

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  19. Kary L. Krismer

    From main piece: “Note that RealtyTrac’s definition of “in foreclosure” is much broader than what we are using, and includes Notice of Default, Lis Pendens, Notice of Trustee Sale, and Real Estate Owned.”

    Wouldn’t this make their data pretty useless for trying to determine future trends? You wouldn’t know if most of the activity was at the beginning or the end of the process.

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  20. Kary L. Krismer

    RE: David S @ 19 – I’ve seen some that were 20% below other REOs which were not in as good of condition! Some times I’m not even sure how they came up with the price, unless maybe they were going back to 1992 to find comps! ;-)

    Realize that the listing agent isn’t always the one that advises as to the price. So if you see one that is way too low, it’s not necessarily the listing agent’s fault.

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  21. Julie

    Tim,
    In looking at a different county, I noticed that many of the NTS are for properties owned by LLCs. Based on the loan amounts, some of these properties appear to be commercial, not residential. In compiling your data, do you count all NTS for the month, or do you filter them in some way? Just curious, thanks!

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  22. David North

    By David S @ 19:

    RE: karl @ 14 – I’m starting to see a number of short sale and bank owned properties close for really low selling prices recently. Too bad these can’t be used as comps against non-distressed property.

    I use short sales and bank owned properties as comps all the time. Not doing so ignores a huge segment of the legitimate market. The caveat is that they have to be adjusted for condition, which is very subjective. But it is far less legitimate to pretend that they aren’t comps when they make up so much of the market, than it is to risk some extra subjectivity and include them. After all, that’s what buyers do (even more subjectively), and they make half of the market.

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  23. Julie Lyda, RE/MAX Northwest Realtors

    By Julie @ 22:

    Tim,
    In looking at a different county, I noticed that many of the NTS are for properties owned by LLCs. Based on the loan amounts, some of these properties appear to be commercial, not residential. In compiling your data, do you count all NTS for the month, or do you filter them in some way? Just curious, thanks!

    Julie -You bring up a very interesting question.

    Are commercial properties included in the NTS?

    I’m going to have to research that – Maybe Tim knows.

    Very good question though, as it could throw off the concept that the NTS statistics are all based on residential properties.

    In regard to the LLC’s – many could be builders/investors losing their properties and/or lots.

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  24. Kary L. Krismer

    By Julie Lyda, RE/MAX Northwest Realtors @ 24:

    In regard to the LLC’s – many could be builders/investors losing their properties and/or lots.

    One reason some new construction is now so cheap is that there have been a lot of lots dumped or lost to foreclosure. I don’t deal a lot in unimproved property, but Ive been told by some agents that there are lots available where the price wouldn’t even cover the cost of the improvements that were put in. Until that works its way through the market, it will contribute to an oversupply of houses.

    Just to make up some numbers, and ignore carrying and closing costs, if you had a lot that would have cost $50,000 to install utilities and $200,000 to build the house, but the lot is bought for $30,000, the builder would make a profit starting at $230,000 rather than $250,000, plus whatever they would have had to pay for the land. But beyond that, the ability to pick up the lot for $30,000 when four years ago it would have cost $130,000, that would make the builder much more inclined to buy and build.

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  25. eastside reader

    CNN Money recommends buying in Seattle over the renting.

    http://money.cnn.com/galleries/2011/real_estate/1105/gallery.rent_or_buy/2.html

    Seattle — BUY
    • Why buying might beat renting now
    Home price gains needed to make buying a better deal: 4.84%
    Historical average gain: 6.06%

    etc.

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  26. softwarengineer

    RE: No Name Guy @ 18

    I’m Happy You’re Bullish

    I’m sure 2011 order rates have nothing what-so-ever to do with 2011-12’s employment…Manufacturing Engineers???

    Don’t need too many of them anymore, if all we need is a screw driver and wrench to assemble foreign parts now-a-days…LOL….look at the 787….

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  27. softwarengineer

    RE: No Name Guy @ 18

    Backlogs in 2010 Are Getting Trimmed Away by 2010 Cancellations

    Airbus, same conundrum…

    http://www.spokesman.com/stories/2010/aug/07/boeing-loses-26-airplane-orders/

    BTW, I show backup facts to my allegations, please do the same, or it sounds like wild allegations….LOL

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  28. Lurker

    By eastside reader @ 26:

    CNN Money recommends buying in Seattle over the renting.

    http://money.cnn.com/galleries/2011/real_estate/1105/gallery.rent_or_buy/2.html

    Seattle — BUY
    � Why buying might beat renting now
    Home price gains needed to make buying a better deal: 4.84%
    Historical average gain: 6.06%

    etc.

    I’m having a really hard time understanding their “Home price gains needed to make buying a better deal” rationale.

    Anyone else know what the heck they are talking about?

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  29. softwarengineer

    RE: Lurker @ 29

    Based on CNN’s Sharp Downfall in the News Ratings

    The rest of America can’t figure out CNN’s news logic worth watching or reading either….LOL

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  30. m-s

    I agree, its kind of whacked (Houston c/ price/rent = 17 is a rent; Seattle c/ p/r = 26 is a buy?). I guess its the ol’ opportunity cost thing, but its apples to oranges when you compare paying a mortgage (which includes “rent”) to rent and invest the rest, if there is any “rest”.
    Overall it doesn’t make a lot of sense to consider the decision of rent vs. buy in terms of perceived “historical gain”, when we see how accurately historical gain has predicted the future…
    Only point is that Houston (and Dallas) have been more “boring” markets, with less historical volatility, so the p/r ratio could be more reliable.

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  31. Edward Smith

    RE: Yakima_Hick @ 2 – Hi. I wished you had seen 60 minutes about two months ago. They showed that the banks got caught on turning in fraud paperwork that they owned the houses. So now they have to prove that they own the houses which wall street didn’t include when they sold off to investors. Something like that. Also, the Alt-A loans forecloser problem is larger than the sub-prime mortgage deal a couple of years ago. Take a look driving around. Many neighborhoods have vacant homes in them with no fore sale signs on the lawn. (At least in the Kent/ Covington area. A house 4 doors down from me has been vacant for two years and my next door neighbor is in forecloser. We haven’t hit bottom yet. And wait for the State, city and teachers that get laid off. We’ll see what happens then. My guess is we will bottom at 2000/2001 prices without the layoff problem.

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