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.

19 responses to “Foreclosures Keep Creeping Back Up”

  1. Kary L. Krismer

    Remember the bill that changed the rules on bringing suit after a short sale also made some minor modifications to the foreclosure mediation provisions. We might see a slight rush to beat those changes and a slight pause when they go into effect.

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  2. softwarengineer

    Shadow Inventory of Foreclosed Homes Has Many Possible Explanations:

    ) Paperwork processes are not in place to process the foreclosures properly yet.
    2) Financial Institutions cannot take the book “mark down” on the property yet due to insufficient reserves and risk of becoming insolvent.
    3) Owners are still struggling to pay and though they may have received a 90 day notice, are still not at the point where the foreclosure can nor would be processed, but the finances indicate it is probably eventually inevitable.
    4) Financial institutions don’t have the staff to process so many liquidations so quickly or are holding some back to try to maintain market value on what they are liquidating.

    #2 and #4 make the most sense to me in today’s market, albeit having lived in Seattle all my life; don’t under-estimate #3. We’re a pig-headed bunch, when it comes to selling low in Seattle.

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  3. Kary L. Krismer

    RE: softwarengineer @ 2 – #3 is always present, sort of like how there are always some people unemployed. Those things are highly correlated.

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  4. Ira Sacharoff

    Hmmm. Up through June of 2009, Pierce County was always leading in the “percentage of households receiving NTS notices”, but since then Snohomish County has been at the top, for the most part. Anybody know why?

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  5. Dave0

    The percentage of households in the chart above is determined using OFM population estimates and household sizes from the 2000 Census.

    Isn’t it about time to update the 2000 census data using 2010 census data?

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  6. robotslave

    RE: Kary L. Krismer @ 3

    And in turn, it’s possible that a larger chunk than we realize of the “shadow inventory” isn’t all that shadowy, consisting of owners who are behind in their payment schedule and catching up very slowly, or simply “stably distressed,” maintaining a fixed level of delinquency while continuing to make payments.

    Then again, maybe Ray’s right, and “they’re all coming back.”

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  7. softwarengineer

    RE: Dave0 @ 5
    For the Seattle Area, Its About a 14% Population Increase Estimate In the Government Data During That Timeframe

    the Census may be lagging.

    But I’ll be honest, when I drive around and look out my window, it seems like 2-3 time that amount, a lion’s share of it it may likely not be counted/documented.

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  8. ray pepper

    RE: robotslave @ 6

    Yes, they will ALL come back and be priced to current market values…The sheer unfairness of it all over the next decade will wreak further havoc and disgust to homeowners who continue to play on the same field without at least changing their line up or at least their clothing or equipment if you may…

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  9. Mike

    Wow, I would have thought it would have taken longer for all the looney tunes that have been running around getting into bidding wars to work their way back through the system.

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  10. Scotsman

    Yup, they’re up. But slide the scale marker so you can see all the way back to 2000 and get a sense of the historical baseline. We aren’t up that much. I just don’t see a surge in foreclosures until some external factor in the economy changes- a steep rise in new unemployment or interest rates for example. While the pipeline may be full the intent of the banks seems to be to bleed out current inventories at a rate that does little to affect current pricing. Banks may be slightly increasing activity in anticipation of firmer/higher prices to come through the summer.

    Also, read the other day that the Fed intends to keep ZIRP in place through 2015 now, a year or so past the original target. I coulda told ya that though- rates will never go up until the market collapses or inflation is running wild. Anything else bankrupts the .gov.

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  11. Dweezil

    I’m sure most of you have already seen this one from yesterday’s Seattle Times, but here it is anyhow.
    http://seattletimes.nwsource.com/html/businesstechnology/2017960769_foreclosure12.html

    “The trend was more pronounced in the Puget Sound region: First-time foreclosure notices in March rose 70 percent in King County from the previous month, according to RealtyTrac data.”
    “Bank repossessions, however, slowed in the region last month. They were down from the previous month by 13 percent in King County and 25 percent in Pierce County, RealtyTrac’s data show. But in Snohomish County, they were up by 23 percent.”

    Interesting times coming our way it seems.

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  12. whatsmyname

    RE: ray pepper @ 8
    Ray, I always infer from your “They are all coming back” that I should wait until they come back and reprice to something lower.

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  13. David Losh

    RE: Scotsman @ 10

    I slid the scale back, and it looks bad.

    Inflation is a dream that has passed. The global economie have thrown in trillions of dollars, the price of oil has gone up way beyond where it has in the past, and the commodities markets have done everything they could to create a false sense of inflation. Bush had two wars, gave away money, encouraged bank lending, and what we got was a bubble, with a crash. That doesn’t count as inflation when people have lost billions of dollars in wealth.

    When people retire with the little pension money they have, or social security, why would they hold onto the family home? Even if you got inflation it is just a lateral move, you sell, you pay more for stuff.

    I think people will wise up this year, and sell to hold cash as deflation continues. There are no economic conditions that could cause inflation. The government keeps interest rates low, manages debt levels, and waits for true economic growth. That’s what makes sense to me. We produce more, make more, pay more in taxes, and manage the debt.

    What do you see?

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  14. Scotsman

    RE: David Losh @ 13

    I think we muddle on for some time until inflation ramps up. Might not happen for almost a decade. Or there’s this:

    http://www.theburningplatform.com/?p=32217

    “The ruling class and opinion leaders are dominated by linear thinkers that believe the world progresses in a straight line. Despite all evidence of history clearly moving through cycles that repeat every eighty to one hundred years (a long human life), the present generations are always surprised by these turnings in history. I can guarantee you this country will not truly experience an economic recovery or progress for another fifteen to twenty years. If you think the last four years have been bad, you ain’t seen nothing yet.

    Hope is not an option. There is too much debt, too little cash-flow, too many promises, too many lies, too little common sense, too much mass delusion, too much corruption, too little trust, too much hate, too many weapons in the hands of too many crazies, and too few visionary leaders to not create an epic worldwide implosion. Too bad. We’ve experienced horrific Crisis periods three times in the last 250 years and winter has arrived again exactly as forecasted by Strauss & Howe in 1997″

    ;-)

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  15. John Bailo

    RE: softwarengineer @ 7

    Seattle proper is among the slowest growing regions in population compared to the Oly area.

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  16. David Losh

    RE: Scotsman @ 14

    Foreclosure will continue to rise, and property prices will continue to fall. We are in a deflationary trend. Prices can not continue at this rate. We don’t have the wages to support the price of housing, food, gas, autos, or clothing.

    We don’t have the wages.

    I’m thinking that without government spending we would be in really bad shape. There won’t be a construction wage base expansion because we already over built, globally.

    Where do you see wages coming from?

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  17. softwarengineer

    RE: John Bailo @ 15

    I Guess Wikipedia is Just More SWE Population Data to Ignore

    “…In recent years, the city has seen steady population growth, and has been faced with the issue of accommodating more residents. In 2006, after growing by 4,000 citizens per year for the previous 16 years, regional planners expected the population of Seattle to grow by 200,000 people by 2040.[202] However, former mayor Greg Nickels supported plans that would increase the population by 60%, or 350,000 people, by 2040 and worked on ways to accommodate this growth while keeping Seattle’s single-family housing zoning laws.[202] The Seattle City Council later voted to relax height limits on buildings in the greater part of Downtown, partly with the aim to increase residential density in the city centre.[203] As a sign of increasing inner-city growth, the downtown population crested to over 60,000 in 2009, up 77 per cent since 1990.[204]…”

    http://en.wikipedia.org/wiki/Seattle

    You can unfound allegate and dumb down arrow me all you want I’m still right….LOL

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  18. Blurtman

    RE: Scotsman @ 10 – Isn’t part of the thinking that the banks are so insolvent that they need to be given a Fed money machine policy to help them stay afloat and possibly dig out? Or is it just really lazy people with no work ethic who have too much influence?

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  19. Ross

    RE: David Losh @ 13 – What you saw in the recent run-up and crash (since the mid 1990’s) was the biggest wealth transfer in history. It was a frontal assault on the middle class, and the government (the ostensible protectors of the rule of law) accepted their bribes and allowed the assault to succeed.

    Those debtors bankrupting out of debt, or even better, the strategic defaulters who live rent free for years before settling out of debt, are the few potshots headed back in the other direction. Getting this economy out of debt should be one of everyone’s priorities, and those people are doing a wholesale job of it. If only we could embrace their attitude for student loans as there’s another financial armageddon still building there.

    “We don’t have the wages.”

    Exactly. And we especially don’t have the wages if we’re stuck with crushing debt of one sort or another (mortgage, student, divorce, etc.).

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