Full disclosure: The Tim is employed by Redfin.
We’ve been digging into a lot of different data at Redfin lately, and I found this particular set to be quite interesting. What I’ve done here is take all the bank-owned (REO) sales over 2011 and group them by the bank that was selling the home. The table below shows the 20 banks that unloaded the most REO inventory around Seattle in 2011.
In total there were 11,910 REO sales across King, Snohomish, and Pierce Counties in 2011. 2,199 of those (18.5%) were sold by Fannie Mae, with an additional 629 (5.3%) sold by Freddie Mac. When you include HUD and the Veterans Administration, the total share of Seattle-area REOs sold by federal government agencies hits 28%.
Here are a few overall stats to give the numbers in the table some more context. “StO” is the ratio of the sale price to the original list price, while “StL” is the ratio of sale price to the final list price. For “Days on Market” I’m counting the number of days between when the listing originally hit the market and when it went pending. The numbers in those three columns in the table are the average for all the sales by the respective bank in 2011.
Bank-Owned: 11,910 sales, 90.9% StO, 97.6% StL, 65 Days on Market.
Short Sales: 4,461 sales, 87.0% StO, 98.0% StL, 129 Days on Market.
Non-Distressed: 23,715 sales, 93.8% StO, 97.1% StL, 81 Days on Market.
Click on any column header to sort by that column.
| Bank | 2011 Sales | Sale-to-Orig. | Sale-to-List | Days on Market |
|---|---|---|---|---|
| Fannie Mae | 2,199 | 91.4% | 96.8% | 54 |
| US Bank | 629 | 89.5% | 97.7% | 66 |
| Freddie Mac | 626 | 92.0% | 99.2% | 63 |
| Deutsche Bank | 583 | 88.9% | 96.9% | 66 |
| Wells Fargo | 485 | 91.4% | 98.8% | 69 |
| Aurora Loan Services | 383 | 94.6% | 99.4% | 51 |
| US Dept. of Housing & Urban Development | 354 | 89.7% | 99.5% | 63 |
| HSBC Bank | 323 | 89.4% | 97.9% | 70 |
| Bank of New York Mellon | 214 | 90.2% | 96.8% | 57 |
| Bank of America | 198 | 90.2% | 96.5% | 64 |
| Dept. of Veterans Affairs | 158 | 92.4% | 97.0% | 64 |
| Citibank | 144 | 93.7% | 97.6% | 58 |
| Sterling Savings | 132 | 91.5% | 94.5% | 45 |
| Washington Federal | 124 | 93.8% | 97.3% | 75 |
| Boeing Employees Credit Union | 104 | 92.7% | 96.2% | 72 |
| GMAC Financial Services | 92 | 93.2% | 98.8% | 54 |
| JP Morgan Chase | 83 | 93.3% | 99.6% | 62 |
| First Savings Bank Northwest | 78 | 95.2% | 97.0% | 96 |
| Union Bank | 71 | 89.6% | 95.1% | 110 |
| Homestreet Bank | 70 | 93.3% | 97.7% | 82 |
And now for the awards…
Most Realistic Original Pricing: First Savings Bank Northwest – 95.2% Sale to Original
Least Realistic Original Pricing: Deutsche Bank – 88.9% Sale to Original
Most Willing to Negotiate: Sterling Savings – 94.5% Sale to List
Least Willing to Negotiate: JP Morgan Chase – 99.6% Sale to List
Quickest to Sell: Sterling Savings – 45 Days on Market
Slowest to Sell: Union Bank – 110 Days on Market
Some of those stats (especially the first two) seem like they might be useful to a potential buyer if they’re considering making an offer on a bank-owned home. If you want to figure out which bank owns a home you’re interested in, I recommend these posts: How-To: Navigate and Understand Public Records and Guided Tour: King County’s New Online Property Records.
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Nice stuff Tim.
Amazing that distressed is ~40% of 2011 sales.
Are you possibly able to do a monthly time series showing the proportion of REO/Short-sale/non-distressed like what Calculated Risk had today for Sacramento? And can you do it for more than just 2011?
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great work! Printed it and now the table is pinned up here next to my desk for a quick reference..
No shock about STSA being at the Top of the List to UNLOAD. Talk about insolvency..Good Good: http://finance.yahoo.com/q?d=t&s=STSA
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With these figures can we finally stop trying to exclude distressed properties from non-distressed properties to arrive at a fair real price for transactions? It’s forty percent of the market for cripes sake and will only increase in share for the next few years. I also think the discounts from list will only increase as the foreclosures ramp back up after being stalled all year. Maybe in 2012 if the percentage of distressed property sales crosses over fifty percent of the transactions we should exclude all of the non-distressed properties in calculating fair market values? It’s also about time that the county assessors stop playing the same game. Fair markets include all transactions, not just the ones that can be used to calculate higher real estate values while excluding the lower other ones. These are no longer an isolated few transactions.
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Would be great to see these on a heat map to see which areas have more distressed and which have more non-distressed.
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Tim is there anyway you can separate out whether the REO’s were really owned by the banks listed or whether they were just agents acting for the true owner(s)?
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RE: Pegasus @ 3 –
” Maybe in 2012 if the percentage of distressed property sales crosses over fifty percent of the transactions we should exclude all of the non-distressed properties in calculating fair market values?’
What part of D-I-S-T-R-E-S-S-E-D don’t you understand? Those aren’t real sales- they’re outliers, especially if north of I-90.
/sarc
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RE: Pegasus @ 5 – Not sure what you mean here… This is based on who the public records said the seller was when the sale was recorded with the county.
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RE: Scotsman @ 6 – Sorry …..I forgot. :^)
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Deutsche Bank owns the home we rent. My main hope is that they stay solvent long enough to work something out. It remains a very, very slow process to say the least.
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RE: Pegasus @ 3 –
An interesting chart would be to show the relationship of distressed property and school ranking. It’s a bear to do, but I find that the 10 ranked elementary school areas have very few distressed property sales, compared to those in areas where the Elementary School is ranked a 4 or lower.
That 40% distressed usually is 60% or more in one area and 20% or less in others, to equal 40%. Not 40% across the board. And the ranking of the elementary school seems to make a big difference.
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RE: The Tim @ 7 – Most of these bank REO’s are not really on the banks’ books any longer. In many cases they sold the paper to investors(mortgage bonds) or another bank sold the mortgage and they are only acting as agents for the mortgage holders. It would be interesting to see how many of these mortgages were still actually on the books of the banks. The numbers for Bank of America are really small for all of the damage they did here with their Countrywide subsidiary. The same thing goes for JP Morgan Chase with their WAMU acquisition. Something smells.
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RE: Pegasus @ 11 –
Negotiations can involve the bank or servicer, the investor who currently owns the loan, and the PMI folks who will be responsible for covering the insured loss. Throw in a couple of realtors and you’ve got some kind of soup.
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The only award Chase deserves is for the most connected corrupt bank of the bunch.
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RE: ARDELL @ 10 – Poverty sucks Ardell. That is what those charts would show. The lower income areas are the most impacted by this depression. The schools are not entirely immune to those surroundings. When you are fighting gang warfare both outside and inside these schools what do you think the outcome will be? We don’t need a chart to see who suffers the most. It’s obvious but sometimes it takes a little time to show up.
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RE: Scotsman @ 12 – Soup or….poop?
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RE: Pegasus @ 14 –
I grew up very poor. But the Mafia bought up anyone’s house if they were losing it, and rented it back to them. The Italians-only Catholic School I went to was free, and around the corner, and provided a great education. Better than my Upper-Middle Class children have had in their high ranked public schools. Poor didn’t used to be so bad, when you had tight knit neighborhoods.
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I do have the breakdown of REO’s, Short Sales by month (going back to 2010) on my blog for both King County and Snohomish County for those that are interested.
Look in in the left hand column under graphs. They are broken out by county.
I track the solds and active inventory as well.
I also have the absorption rates, ie. country foreclosures vs. what has sold.
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RE: Scotsman @ 6 – In order to get a true sense of the Seattle housing market, you have to exclude REO, exclude anything south of I-90, and include Redmond because it feels like Seattle.
Duh.
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Can you do prices? in tiers, or even a ball park of tiers?
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RE: The Tim @ 7 – I was going to ask if you sourced this from the MLS, but clearly that isn’t feasible, since most are simply marked as “owner of record” in the MLS. So, you revert to public records.
Further to what Pegasus mentioned, simply taking the owner name from the public records on the deed is wrong in tons of cases, and makes your chart unreliable. The only thing I won’t disagree with on the chart is that Fannie & Freddie lead in volumes, but the rest of the bank names, other than local banks, are suspect due to how these assets get passed around when they are distressed.
By the time a foreclosure happens, the actual loan is often owned by a different bank, yet the sale is facilitated by some other bank. I recently sold a home that was listed and marketed by the Wells Fargo REO dept. If you checked the deed, you’d think that Wells Fargo foreclosed. Not true, it was actually a US Bank owned asset, which was only apparent upon further examination of the trust that actually owned the note.
I’ve seen other banks transfer foreclosing assets, like BofA going to Mellon Bank, but BofA still fronting the actual foreclosure proceeding.
Not sure which bank you want to rank. Is it the original loan maker or the one who bought the distressed asset for liquidation? Bank of New York Mellon probably wasn’t originating or even servicing a lot of loans in WA, and I believe that they are liquidating former Countrywide assets, which is why they appear on your list.
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RE: ARDELL @ 16 – I suspected it! Old world school through and through. :)
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RE: ARDELL @ 16 – That was the old days. Now everything is at risk in a poor neighborhood. Not to say that wealthy neighborhoods are risk free but where would you rather live when considering only the risk factors and school quality?
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RE: Kevin Lisota @ 20 – Don’t forget that first the FED and then Fannie & Freddie went out and BOUGHT a lot of high risk mortgages that were still on the major banks’ books in the first few years of the crisis to do a semi-covert bailout with the tax payers to hold the losses in the end to prevent the banks from going under. There should be no surprise that the Federal Government now is taking the lion’s share of the foreclosures losses because of this. Remember who initiated all of those bad loans that Fannie & Freddie are guaranteeing? It wasn’t Fannie & Freddie. It was our major banks that did.
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By ARDELL @ 4:
That’s a great idea. It wouldn’t be too difficult to make a map by zip code that displays # of foreclosures, # of non-distressed, and ratio. A little more effort could produce a drilldown per zip code showing the exact location of each home (color coded by distressed/non-distressed). Unfortunately, I don’t have the data, but I think this would be a great boon to RE agents, sellers, and buyers alike. Additional features, such as loss from peak, average, median, and mode could be included if enough historical data were available. A dropdown could be used to select the time period of data you want to view. It would be a heck of a cool and useful app. :)
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One in four? With programs like this that number will grow, but not for a while.
Tired of working? Why not take the next year off, then stop paying. Live free (at least housing- but check into the food stamp deal . . ) for the next 2 to 3 years- or more:
“Freddie Mac announced Friday that it was giving mortgage servicers the authority to offer up to 1 year of mortgage forbearance to unemployed homeowners who have Freddie Mac-backed mortgages.”
http://www.chicagotribune.com/business/breaking/chi-freddie-mac-to-grant-breaks-on-mortgage-payments-for-up-to-a-year-20120106,0,1820405.story?source=patrick.net
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RE: Scotsman @ 25 – Is there anything special that we have to do besides losing our jobs to qualify? Do we have to be on food stamps too? Do we have to sign up for free cell phones and internet cable first to qualify? What if we quit paying our health care premiums? Will that help us qualify?
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I have come across many properties that are owned by european REITs/hedge funds, mostly undeveloped property. Rarely listed as the owner on the county webside. They are serviced/listed by large local banks. possible that the have counter party exposure
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RE: karl @ 27 – Hey Karl. The banksters sold the mortgage crap all over the world. It’s no wonder the FED has been accommodating foreign banks and countries for years now since the scam imploded. Sometimes a little grease on the wheels goes a long way to easing the pain on the road to perdition.
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RE: karl @ 27 –
“Previous attempts at enticing private investors such as hedge funds to buy homes in bulk have not appeared to be lucrative to the private sector, which is the major roadblock in moving forward with a plan.”
Read more: Government to unload foreclosures | Bankrate.com http://www.bankrate.com/financing/mortgages/government-to-unload-foreclosures/#ixzz1j7hUXD3b
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RE: Scotsman @ 25 –
its a BEAUTIFUL thing! The GIFTS keep rolling in offering homeowners to save like they never have before..
The only real question is…………………………..Will you take your gifts that you are being offered? Millions will by the time its all over and the MASSES of homes will return to their current market Value in one fashion or another…Because we all know….people only remain STUPID for so long..
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RE: Pegasus @ 26 –
WHAT!? You’re still paying health insurance premiums? When there’s free care at your local emergency room? And no, you don’t “lose” your job, you get fired and discriminated against at the same time, then go get yourself some free legal help and win the big settlement. Sounds like you need to take the free classes offered by the .gov on how to get all that you deserve.
http://www.benefits.gov/
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Nice work, Tim!
And some really good comments.
Rick
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RE: Kevin Lisota @ 20 –
Kevin, Good Post , but I think I disagree with the term “unreliable” since Tim’s data isn’t designed towards answering some of the useful issues you raise. I wouldn’t call a screwdriver “unreliable” for not being a hammer. I interpret the data as showing who handled the REO transaction (“distressed asset liquidator”) and how they priced and sold it and what the time frame was . No more and no less.
But, your stuff about the who owned what and when and who sold it to who (whom?) is good. A similar review of loan originators might be historically interesting and might make me even more pi**ed off than I am. Not that I need that.
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RE: Pegasus @ 22 –
Kirkland
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RE: Jonness @ 24 –
I have the data, but don’t know how to do it. How much do you think it would cost to hire someone to do that?
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By Scotsman @ 31:
I see a problem. You have to have a certain level of competence to understand how to get your free money from the government. You have to fit yourself into the qualifications, know how to make the claims, navigate the paperwork, etc. And yet, if you had that level of competence, you likely could get a job and would not need or qualify for the free money in the first place.
So who gets the free money?
The competent but lazy, that’s who.
It reminds me of when I collected UI. I became quite proficient at it. In lieu of job skills, I developed the skills required to file for and meet the obligations of collecting UI. I did this for months, before finally getting tired of vacation and taking a job.
Meanwhile, other guys in the program were constantly screwing up their claims and getting audited (in one case denied). And some of those guys… Yeah, not sure their job prospects were that bright.
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RE: Kevin Lisota @ 20 – Hmm, I think this might be one of the most insightful posts in a number of months (if we’re adopting the slashdot model)….. Does anyone else see this?
I’ve long been critical of the bank’s treatment of delinquent loans as well as their valuation of property…
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I really like the breakout of data between REO, Short sales, and Nondistressed sales. Seems like the same spreadsheet could easily breakout the mean and median sale price for each of the same. That would be an interesting comparison.
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By ARDELL @ 16:
Boy, the way Glen Miller played. Songs that made the hit parade.
Guys like us, we had it made. Those were the days.
Didn’t need no welfare state. Everybody pulled his weight.
Gee, our old LaSalle ran great. Those were the days.
And you know who you were then, girls were girls and men were men.
Mister, we could use a man like Herbert Hoover again.
People seemed to be content. Fifty dollars paid the rent.
Freaks were in a circus tent. Those were the days.
Take a little Sunday spin, go to watch the Dodgers win.
Have yourself a dandy day that cost you under a fin.
Hair was short and skirts were long. Kate Smith really sold a song.
I don’t know just what went wrong. Those Were The Days.
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Timely Tim, et al, et ex-uxes…
Some question you about who really “owns” those RE loans.
How odd. Well, MERS, of course.
Setting THAT aside…, what you must and need to know is that “the originator” of the RE loan was not, of course, due to RESPA, the Realtor – for the buyer or for the seller. More important, the “entity” – local or national bank, SnL, CU, whatever – that started the paperwork almost never “funded” the loan. And the entity that funded the RE loan almost always sold it – to FMae or FMac or Va or FHA or to the Wall Street banksters to “securitize.
Who, eventually, “bought the farm”, is interesting; but they almost never “serviced” the loan.
For example, WAMU (now Chase) may have “originated” the RE loan, and then got Wall Street banksters to buy it, who then hired BKofAm to “service” it for them.
Or
Countrywide (now BKofA) may have originated the RE loan, got FMae or FMac to buy “The Farm”, and they hired Chase to service it for them.
The point is, of course, that whomever “originated” the RE loan then sold it; who they sold it to was interesting – only if they held on to it; who it was re-sold to only MERS knows, bcuz that paperwork was never filed “of record”, anywhere; and the entity that “services”, as in collects the monthly payments, is totally someone else.
You do know The Routine = “Who’s on first?”
If this were the “Middle Ages” we could discuss “How many angels can dance on the head of a pin”. However, that was as irrelevant then as the question is now about of WHO really holds “the debt” when we are looking at the foreclosure sale. Who cares?
What matters is what DID it sell for, before the foreclosure; and what is it being sold for now either @ the foreclosure or the subsequent re-sale,
You do see, do you not, that for a diver in Acapulco to ask how far down the water is.., is of course interesting; but what we – he and you – really want to know is how far “underwater” is Terra firma.
(there may be too many pun there to apologize for)
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Since When is the Federal Government Suppose to Make Sure We’re All Homeowners?
Even Obama wants to disconnect the umbilical from Freddie and Fannie sucking on the horrifying federal deficit:
“…Along with federal agencies, taxpayer-owned behemoths Fannie Mae and Freddie Mac guarantee more than nine of every 10 new mortgages. They were effectively nationalized in 2008. Delinquencies on home loans they back have thus far cost taxpayers more than $150 billion. Their regulator, the Federal Housing Finance Agency, estimates Fannie and Freddie could need up to $363 billion in taxpayer cash through 2013, it said in an October report….”
http://www.huffingtonpost.com/2011/02/11/obama-fannie-mae-freddie-mac_n_821824.html
IMO, these MSM deficit numbers for mortgage welfare to the banks are low-balled.
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RE: Kevin Lisota @ 20 – As explained by ricklind @ 33, the purpose of this post is not to get an idea of which bank is losing more money, or anything about who “really” owns a loan or took a loss.
The purpose, as I tried to make clear at the end of the post, was to give potential REO buyers an idea of what to expect when negotiating with a bank on an REO purchase. In that case, all we care about is which bank facilitated the transaction, not who “really” owned the home, if it was a different bank.
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By softwarengineer @ 41:
Since the REIC became the largest source of federal campaign money.
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RE: ARDELL @ 16 –
haha – I think most people were ‘poor’ back then. I must admit, it was a lot of fun having 5 boys stuffed in one very small bedroom. Wouldn’t have missed it for the world. The music of the 60′s was unforgettable.
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39. MichaelB
January 11, 2012 at 1:59 am
LOL ! You forgot about walking through the snow 6 miles one-way to school every morning on an empty stomach with holes in the soles of my government issued shoes and no socks with a hand-me-down coat that didn’t fit and underwear worn by my brother…
Yes we Can !
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Now this post is excellent. Meaty material.
What strikes me is that the Sold/List numbers are so much closer than I had assumed they were.
I was under the impression that list prices were being hammered down 20-30% from unreasonable prices set by servicer/sellers. Apparently original list prices are much closer to market than I thought…..and Time on Market is much shorter than I expected too.
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RE: ARDELL @ 4 –
Hard to pinpoint where the foreclosures are on a grand scale, but price tells us a lot.
60% of King County Sales, those sold over $300,000, had a distressed property rate of 11% to 24%, and no where near 40% overall. That changes as the price drops.
71% of 2011 SFH sold King County are Distressed in the $200,000 or less price range.
41% – $200,000 to $300,000
24% – $300,000 to $400,000
14% – $400,000 to $500,000
11% – over $500,000 price range.
So if you are looking for a home in the $400,000 plus range, the odds you will run into a distressed property are much less, less than 15%.
Conversely, only 29% of the people buying homes for $200,000 or less, are buying homes that are not distressed.
Pegasus said “These are no longer an isolated few transactions.” There never were, Pegasus.
But they were never evenly spread out either. At $200,000 or less purchase price they are 7 out of ten. At $300,000 and above you start moving quickly toward only 1 or 2 in 10.
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Here is the graph for King County 2010-2011 REO properties sold by price range and volume.
http://4.bp.blogspot.com/-OY-nsNuBLbU/Twzpgk1PXBI/AAAAAAAAA7I/TcIluzbJ72M/s1600/King%2BCounty%2BREO%2BBank%2BSales%2BBy%2BMonth%2BBy%2BPRice%2BRange%2B2010-2011.png
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Here is the graph for King County with number of units sold by REO, Short sale, and non-distressed for 2010-2011.
http://4.bp.blogspot.com/-XIwpZF0LGrs/Twt1QwhbDaI/AAAAAAAAA6k/yU86T-PLHbo/s1600/KIng%2BCounty%2BDistressed%2BProperty%2BSales%2Bby%2BMonth%2BDecember%2B2011.png
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RE: wreckingbull @ 43 –
Yes, But Since That is True
Whose fault is it when we only get crummy politician candidates to choose from? The voters or the lobbyists?
Speaking of government owned “distressed properties” lion’s share in Seattle, here’s a similar story from Indianapolis….its about a real estate attorney specializing in avoiding foreclosed property situations, who is losing her own house due to foreclosure.
Article:
“…Jackson blames her situation on an extra annual insurance premium that she said Chase deducted from her account in 2009 on top of her usual payment. The overcharge triggered a series of account miscalculations, eventually leading to default, according to Jackson. “I’m disgusted with the whole thing,” she said. “My credit is trashed. I have nothing at all to finance my business. I might have to file for bankruptcy.”…”
http://www.huffingtonpost.com/2012/01/06/foreclosure_n_1189367.html
I noticed Chase bank was involved, perhaps it was because she made someone high up mad at her? Makes you wonder.
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RE: ARDELL @ 47 – “Pegasus said “These are no longer an isolated few transactions.” There never were, Pegasus.”
The point was that in especially dealing with the assessors and appraisers the excuse always was that distressed sales were unusual(a very small percentage) and could not be counted in valuations. The amount of distressed sales has exploded in the past 6 years. Perhaps my using “isolated” confused you? I was expressing about the percentages growing from almost nothing to 40 percent of the market now. Capice?
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RE: Pegasus @ 51 –
I understand what you are saying, but 40% of a County’s Sales being Distressed does not impact appraiser’s and assessors, as they are never considering a County-wide result. They are still generally looking within 1 mile of the subject property.
An appraiser is supposed to be looking at market value. If within a mile of the subject property, distressed sales have taken over “the market” as to value, then they will consider them. If not…they won’t. 40% of the County has no influence. Real Estate is still “local” and usually within a mile of the subject home. The last two appraisals I have reviewed, both within the last 30 days, had no distressed properties in the appraisal or nearby the two homes. One was in Bothell 98011 and the other in Redmond 98052.
I don’t want to project the market being better than it is…but neither should we paint a picture that it is worse than reality either. There are many people looking for homes in the $400,000 and up range who are getting the erroneous impression that bargain-distressed properties are growing from trees. This leaves them disappointed…or worse…thinking that someone is hiding those 40% bargain homes from them, because they have read they are plentiful. They are not plentiful everywhere…and almost non-existent in may places and price ranges.
That 40% result is 71% in one area and 11% in another…blending the two and saying 40%!!! does no one any good. The middle ground is misleading, and not accurate or even meaningful reporting.
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RE: ARDELL @ 47 –
Great info Ardell, and a home run post by The Tim. I think this explains why the bottom tier has fallen the most. Because a much higher percentage of them are short sales or bank owned. But as the mutual fund ads say ” Past performance is not an indicator of future results.”
I’m not particularly good at predicting things, but that won’t stop me.
Ardell seems to suggest that the neighborhoods she sells the most houses in, the neighborhoods she knows the most about, are “safe” because thus far, they haven’t fallen percentagewise anywhere near the neighborhoods that are less expensive and have lesser quality schools. And that those neighborhoods have seen far fewer short sales and foreclosures. But does that mean things will stay that way? Heck if I know. What I do know is that towards the end of the bubble, the biggest price climbs were in the lower tier, in places like Auburn, White Center, and Skyway. Why was that? Because everything else had become too expensive for most people, and lending standards were lax. Then, when the market crashed, these neighborhoods fell harder than anywhere else.
Bank owned homes I’m seeing in places like Auburn, White Center, and Skyway are currently selling for 50% of what they sold for in 2007. Does that make them a good deal now? I don’t know. In a lot of cases, it does make their monthly payments less than what they would rent for.
And what’s the impact on neighborhood stability that all these distressed sales have? I live on a corner lot, in an area where a high percentage of the total sales are distressed. The entire number of houses in the two blocks is 20. The total number of houses that sold in the last year is 2. One was bank owned, and one was a short sale. So that makes a 100% of the total sales distressed sales. But in places like Florida or Las Vegas or Detroit, there are stories of house after house after house being empty as a result of foreclosures. On my block, 2 houses out of 20 has very little impact. The house that sold as a short sale was owned by a real estate agent who drives a late model Mercedes. If real estate agents are particularly susceptible to foreclosures and short sales( They are. They drink their own Kool-Aid), then buying a house where a bunch of real estate agents live might not be such a great idea if you’re looking for neighborhood stability.
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RE: ARDELL @ 52 –
Let me begin by saying that the lower tier is the most vulnerable to foreclosure. Many people bought in for $200K, plus a little more. There was a time before 2006 where we had a market place for below $200K. I remember writing about the fact the below $200K market disappeared.
Maybe those properties were bought by builders, or want to be investors for rentals. Well, that’s not looking to good right now, so they may be dumping property. They may be the first wave, because the low end has LLCs, and also that first time home buyer who sees no point of paying for a loss over a thirty year period.
My opinion is that the defaults will move up, or people will pay down the principal balance in order to sell.
No matter how you slice it the market will drop in price.
For those thinking of buying an REO, you will be paying full retail. Make sure you get a very, very good property for the price you will be paying. Banks can be smarter than they look.
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RE: David Losh @ 54 –
I Agree With Ira and David
With a caveat, check out this WSJ referenced blog, article:
“…In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%.
Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009… …”
http://www.freerepublic.com/focus/f-bloggers/2767458/posts
IMO the heydays of those upper tier neighborhoods are dwindling fast too. BTW, when the bottom 99% collapses the rich catch the same cold too, they needed to sell to the consumers….what may be happenning too is more equity swaps at the richer levels [exchanging savings and such for real estate they need because they have to have a place to live], even Kary said the higher tiers were not using loans and could cash bag 50% or more down without wincing. Old money can run a steam engine for many decades too, but even that runs out.
Buying foreclosed properties for half price also may look good at first glance as a potential landlord, until you get the likely lists of needed repairs and the grim scurry to find a tennant out there you can trust with a job history you can trust too….that already hasn’t bought themselves a foreclosed home of their own anyway…
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RE: Ira Sacharoff @ 53 –
“Neighborhood Stability” should not be an assumption. Anyone buying or selling a home should not be looking at County-wide info as an indication of current or future “stability”, or lack thereof.
An agent can easily assess a neighborhood’s “stability” by providing the home buyer with an ACTUAL and FACTUAL assessment of the neighborhood’s “Financial Health”.
http://raincityguide.com/2010/11/11/are-you-buying-in-a-financially-healthy-neighborhood/
In that regard it is not sufficient to merely say the asset value of the neighborhood is $17,500,000 and it is 64% “financed”. Every buyer and seller should KNOW, and not be guessing, at the likelihood of future foreclosures in his neighborhood in this manner, and every agent has the ability to provide this type of report:
Neighborhood #1:
63 Homes
12 Owned Free and Clear with no encumberances
33 Owned with less than 60% mortgaged…not likely to become distressed
20 Owned with 60% to 70% mortagaged
Zero have had a Notice of Default filed in the last two years
5 have been refinanced up to 75% of current value.
4 were purchased recently with 20% down
1 was purchased in 2007 with zero down and is currently financed at 115% of current market value.
Only one of 63 houses has the potential to become a foreclosure in the near future.
Neighborhood #2:
63 houses
59 bought in 2007 with zero down and are currently mortaged at 140% of current value.
2 were bought with 20% down or more in 2007
None were bought prior to 2007, as the neighborhood was built in 2007
1 cash buyer with no encumberances
1 refinanced to 80% of current value 6 months ago.
Almost the entire neighborhood is positioned to become a future foreclosure.
I am not trying to make things look better than they are. I object to making things look worse than they are…OR leading people to think they can use an average result as any kind of indicator when they are buying or selling a home.
If you are buying or selling a home, you have to pay closer attention to reality, and less attention to an “average County wide” statistic. It’s important that you make no assumptions about your immediate area of interest…get REAL facts. Don’t assume a 40% overall exposure rate.
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Tim,
Can you throw the data together on a geograhical heat map so we can see the distribution of REO sales by area and see if maybe that lead to willingness to negotiate, price, etc.?
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Ardell…you sound just like someone else we all knew and loved; David Lereah! “All Real Estate Is Local: What You Need to Know to Profit in Real Estate – in a Buyer’s and a Seller’s Market”
You can still get a hardcover copy for $5.42
He started to argue the same thing after he first wrote: ” Are You Missing the Real Estate Boom?: Why Home Values and Other Real Estate Investments Will Climb Through The End of The Decade—And How to Profit From Them” and then later changed it to: “Why the Real Estate Boom Will Not Bust—And How You Can Profit from It”
http://www.amazon.com/gp/offer-listing/0385519222/ref=dp_olp_new?ie=UTF8&condition=new
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RE: ARDELL @ 56 –
A bubble is like a pyramid and it requires ever more fools to enter in at the bottom to drive up prices at each successive level. What happens to a pyramid when the base collapses? Each level is impacted on the way down the same was as on the way up… It used to be “Seattle is Different”, then it was certain geographic areas are different. Now it is, my neighborhood is different…. I guess the very last strand of hope will be based on “My home is different”.
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RE: MichaelB @ 59 –
That is true. However the move up sequence to that relevant theory is condo to townhome to home, all being in the same general vicinity. Not single family home under $200,000 up to single family home at $400,000 up to single family home at $600,000 all in the same general area.
So I absolutely agree that there is a logjam, as you say. But the statistical relevance for that would be in the condo and townhome markets…which are even more dismal than the single family home market…most anywhere and without exception.
But I don’t think SB generally deals with condo markets, so I assumed the post was talking only about Single Family Home sales…but I could be mistaken. Maybe Tim can answer that. I re-read the post and didn’t see any mention of condos, but the stats could be for all residential properties, including both SFH and Condos.
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RE: Pegasus @ 58 –
Doesn’t change the fact that it is true though… Ask anyone who is looking for a 2,000 sf + home in Kirkland, Bellevue, Redmond, Queen Anne, Capitol Hill, Green Lake, Ballard…on and on and on…Shoreline even, if they care what is happening in Federal Way? I don’t think you’ll find one person who answers that with a yes. NONE of those areas have single family homes to buy for $200,000 or less…which has the highest foreclosure rate.
If NO homes sell for under $200,000 in your area of interest…then that 71% foreclosure market is irrelevant. Real buyers and sellers of homes do not look at County Wide info. It may be fun to kick it around…but it is meaningless to anyone who is choosing a home to buy, or trying to sell one.
You don’t have to have blinders on…but you also can’t expect the market you are searching in to perform at the level of 40% foreclosures…if it just is not true in your area of interest. To suggest otherwise is just poking fun at life for no good reason.
It’s not a “real estate blog” if it does not ever get down to real and of value info for any home buyer or home seller.
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For some reason King County shows sales prices of $0.00 for properties where the seller was FME. I’m speaking of the property’s assessment page, where the sales history chart is located. Obviously it’s not $0 (even tho the county can’t collect excise tax), so does anybody know where can I find the actual sales price paid for properties that were sold by FME, or FRE? (without having access to MLS sales records, that is?)
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RE: Meg @ 62 –
Meg,
If you know what the MLS number was for the Freddie or Fannie sold property, you can just type it in a Redfin search, for example, and the sale price will come up. If all you’ve got is an address, email it to me or another friendly NWMLS subscriber and that info can be looked up.
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RE: ARDELL @ 61 –
Again the median price per county is irrelevant, but the trend isn’t.
We have seen this a thousand time. When the price point in Columbia City starts to show extreme stress people will move there. The same for Hillman City, the much maligned Skyway, and heaven forbid South of I-90.
Ray is making an excellent point that there are tons of idiot buyers in the market place today, but people won’t stay stupid for long.
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RE: David Losh @ 64 –
Good post David. Real estate isn’t static. Although there are some houses that they can’t seem to give away, when a half decent house in the Seattle gets low enough in price, it will sell. Inventory is low out there, but there are only so many people who are able to buy a 600,000 dollar house in Sammamish or Wallingford or Kirkland. So what will happen? Either the prices in those places will get lower to accommodate the buyers who want them, or those buyers will look at different neighborhoods.
School districts aren’t static either. Kent, for example, still advertises itself as an award winning school district, even though the last time it won an award was maybe 20 years ago. Renton, on the other hand, is generally dissed as having a horrible school district, even though they have shown dramatic improvement and now boast a 93% high school graduation rate. Sure, some school districts are good and will continue to be good, like Mercer Island. Others, like the Lake Washington district and Issaquah now have very large class sizes, but still have a sterling reputation. Things don’t stay the same. The Central District was inhabited by wealthy white people 100 years ago, then 80 years ago it was inhabited by poor Jews, then 60 years ago by poor blacks, then 30 years ago by Ethiopians, and now there’s been an influx in recent years of wealthy white people moving in.
I’m not suggesting that Redmond or Sammamish is going to become a ghetto, but you never know.
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RE: Ira Sacharoff @ 65 –
I was in Columbia City a couple of days ago. My first house was in Columbia City. We did a construction clean up in Hillman City yesterday. It seems to me the neighborhood is reverting back to the much better days before gentrification.
However I was surprised by the amount of construction. There are thousands, upon thousands of housing units everywhere. Then when you get to the rail system of Raineer Avenue, my God that’s a lot of dirt to develop.
Then all around South Lake Union there are cranes, building multi level apartment buildings.
Now the thing that keeps coming back to me was that poll about what’s the most important, and people said a commute. I was thinking a commute to where? a job? Heck that job is going to change in seven years. No one works a job as long as a mortgage.
People don’t keep houses for thirty years because your job doesn’t last thirty years. Boeing is the best bet you have of a cradle to grave support system. Everything else is transitory. Even Boeing might move.
So how viable are all of these thousands of housing units as a way of holding value, no matter where they are?
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Does Redfin have a way to look only at REO’s? Is there any way to tell which bank is listing a property from the MLS?
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RE: Ira Sacharoff @ 65 –
“93% high school graduation rate.”
Really? A world of difference from when I was in HS in the early ’70′s. Good on ‘em!
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RE: Scotsman @ 68 –
It’s what the Renton superintendent claims. She won the State Superintendent of the Year award last year. But I have my doubts, of course. Could they graduate anybody with a pulse, or are there statewide standards? When I mentioned her winning the award to a friend, he responded with ” It’s not who you know, it’s …”.
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A lot of homeowners or potential homeowners are interested in the comfort and energy efficiency of their homes. This is my area of expertise and the home energy efficiency industry is growing rapidly. There are a lot of significant incentive programs, some of which will cover 50% of the cost of upgrades. To caution away from this comment sounding like an ad, I will just leave it at that; if anyone is interested in learning more they can contact me directly.
Tim, I think I remember you bought your house in Everett, so if you wanted to try something up there here is Snohomish PUD’s conservation page:
http://www.snopud.com/conservation.ashx?p=1100
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By ARDELL @ 35:
I suspect the cost would be prohibitive if you hired it out.
I have access to the software that would allow me to do it pretty easily where I work, but I’m not allowed to use it outside of that environment. Since the project interests me, normally, I would donate the time to figure out how to do it all with free software. However, I’m currently extremely committed to a music project that doesn’t leave me much time at the end of the day.
It would make an extremely cool app though. Some day, I will build it…. :)
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By whatsmyname @ 38:
Never mind. Julia Lyda and Ardell just handled this on the Foreclosure decline thread:
“What do you think of these current “average prices” for King County?
•REO/Bank Sales: $231,598
•Short Sale: $333,450
•Regular Sale: $474,383″
“Median Prices in King County Single Family homes on a 90 day rolling basis are:
$399k for not Distressed – 67% of all sales
$265k for Bank Owned – 22% or all sales
$187k for Short Sales – 11% of all sales”
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