August Stats Preview: Spiking Foreclosure Edition

With August now behind us, let’s have a look at our stats preview. Most of the charts below are based on broad county-wide data that is available through a simple search of King County and Snohomish County public records. If you have additional stats you’d like to see in the preview, drop a line in the comments and I’ll see what I can do.

First up, here’s the summary snapshot of all the data as far back as my historical information goes, with the latest, high, and low values highlighted for each series:

King & Snhomish County Stats Preview

Summary: Foreclosures spiked sharply up, sales increased again, and inventory is still at or near all-time lows. Hit the jump for the full suite of our usual monthly charts.

Next, let’s look at total home sales as measured by the number of “Warranty Deeds” filed with King County:

King County Warranty Deeds

Sales look to have risen slightly from last month, and still came in over 30% above last year’s level.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Similar month to month increase, but only barely up (1%) year over year.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

Snohomish County Notices of Trustee Sale

Big spikes upward in both counties. King County is up 36% from a year earlier and Snohomish had a whopping 78% increase from last August. Yikes.

Here’s another measure of foreclosures for King County, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Still below last year’s level on repossessions, but the percentange drop has been shrinking for the last four months straight, from down 63% year-over-year in April to down 47% year-over-year in August.

Lastly, here’s an update of the inventory charts, updated with the inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

Still at ridiculously low levels. In fact, Snohomish County hit the lowest point since before January 2000 (as far back as I have data).

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

  

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.

32 comments:

  1. 1

    Tim, Your Data Movements the Last Three Years Says It All

    It reminds me of a Richtor scale graph after the earthquakes began, before the last few years data, the data history was approx flatline.

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  2. 2

    I suspect the NTS stats will again be meaningless, or at least hard to decipher, due to the Bain v. Mers decision. Some properties may need a new NTS as a result of that decision. Other lenders may hold off filing NTS until there’s a bit more certainty, or until they figure out their best course of action.

    BTW, I haven’t done any searches, but my impression is the number of bank active listings is way down right now compared to months in the past couple of years.

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  3. 3

    I just did a search of closed sales in King County for August, and the number of REO sales was very low. Under 150, when typically they’re over 200. And the volume of short sale closings was again very high for a second straight month, so the banks are apparently continuing to process more. As to that point, I wonder if it’s because the banks are putting more resources on the task, or if it’s because they’re getting better offers?

    Numbers from NWMLS sources but not compiled by or guaranteed by the NWMLS.

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  4. 4
    No Name Guy says:

    I’ve said it before and will repeat: Hurry up and clear the zombie houses to get back to a long term healthy market…..it’s good that the foreclosure pipeline is starting to fill up again. It’ll be interesting to see what happens once these foreclosures go through. How long will the banks hold on to them this time? How much of a hit will the low tier price take as the mix changes? Will that bleed into the mid tier?

    Speaking of holding periods….it would be interesting so see the “latency” period for houses in bank possession and how that has changed over time. If one could do an auto filter on the county records, picking out particular properties that have had a trustees deed filed, then see how long it takes for the subsequent warranty deed (from the bank to the next purchaser), and then on to the NEXT purchaser (or what percent go on to one more purchases in say, 3 to 12 months after the first warranty deed, which might indicate a flipper bought the place from the bank, tidied it up and sold it off to an “owner” occupier, or what percentage go directly to those that keep it for more than a year, which would tend, IMO, to be more a owner, or at least an investor that intends to hold as a rental).

    Are banks (on average, median, mean) holding the foreclosures longer, shorter, about the same? What percentage of properties in the last year, or two, or three that have had a trustees deed NOT had a warranty deed on them (e.g. banks sitting on the inventory)? How has that holding period changed through out the boom and bust years? What percentage of warranty deed sale price did the bank get relative to some guesstimate of what the place was worth immediately preceding the Trustee deed, etc.

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  5. 5
    No Name Guy says:

    RE: Kary L. Krismer @ 3

    I was typing mine when you posted this one…..dang slow typing. :-)

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  6. 6

    By No Name Guy @ 4:

    Speaking of holding periods….it would be interesting so see the “latency” period for houses in bank possession and how that has changed over time. . . .

    Are banks (on average, median, mean) holding the foreclosures longer, shorter, about the same? .

    My impression, without doing actual research, is that it’s much shorter now than it was over two years ago. Four years ago the bank properties were in horrible condition, and often took a long time to sell as a result. Now they’re often cosmetically fixed up.

    For those that don’t need the cosmetic fixing, they can turn around in as little as two months. Less if it’s a cash buyer and not VA. If the property is already vacant, I’ve seen them go on the market in as little as two weeks after the sale.

    Finally, I suspect that the recent buyer frenzy has made that even a shorter time.

    Edit, I just looked at one I remember being particularly fast, and it closed in about 45 days from the sale date, and 30 days from the recording date of the trustee’s deed. The debtor on that one though apparently left the place in immaculate condition, even leaving the appliance manuals out for the future owner.

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  7. 7
    ARDELL says:

    RE: Kary L. Krismer @ 3

    There are almost 4 times as many short sales on market as there are bank owned properties.

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  8. 8

    RE: ARDELL @ 7 – The buyer’s frenzy has depleted both to some extent, but I think it’s depleted REO more. From memory there is less than 1.5 months of active inventory for REOs right now (King County, SFR). Same disclaimer as in post 3.

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  9. 9

    There’s an article on Inman today that says banks are using short sales to help meet their obligations under the robo-signing agreement. ….that doesn’t explain the spike in NTS’ though.
    http://www.inman.com/news/2012/09/4/banks-using-short-sales-meet-robo-signing-obligations

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  10. 10

    RE: Jill Schlicke @ 9 – Interesting. The banks get credit for writing off the balance on a short sale, which is something they would likely never recover, at least in Washington. And by doing that, they probably recover more than if they let it go to foreclosure. Effectively the state AGs in setting up the National Mortgage Settlement are forcing the banks to do what’s in their own interest, but are too stupid to do without some additional incentive. Some punishment! ;-)

    As to your article, it says:

    The Mortgage Forgiveness Debt Relief Act prevents borrowers from having to pay taxes on certain types of forgiven mortgage debt. If the law lapses, homeowners would have less of an incentive to pursue short sales because any amount forgiven would be considered taxable income.

    The second sentence is incorrect. At best, any amount forgiven “may be considered taxable income.” Another reason not to get tax advice from news sources.

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  11. 11
    David Losh says:

    RE: Kary L. Krismer @ 10

    Yeah, banks are so stupid that by waiting to process more short sales the government steps in to give them more money.

    Hmmm, prices are rising, and the government is giving banks more money.

    In additions it sounds like banks are also skirting the robo signing issue.

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  12. 12
    David Losh says:

    RE: Jill Schlicke @ 9

    In my opinion people still think they better off by walking away, or staying, and not paying the mortgage.

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  13. 13
    Lo Ball Jones says:

    I’ve been noticing some building going on around Kent, Maple Valley region…but very, very tepid. Crews of maybe five or six.

    It’s mostly building out developments that were started, then halted…like maybe they built 2/3rds, but left the rest as dirt lots with utility pipes sticking out. Now those are getting built.

    I am also noticing a ton load of banner ads for developments around, but not in, Seattle, and all of it is targeted at renters. Prices around $220,000 — going after the people who will find it “cheaper to own”. Maybe if you haven’t already you can do a feature on some of these. Is it the real thing? Or are there lots of add on monthly fees or other hidden obligations that make the bottom line a higher monthly?

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  14. 14
    Howard says:

    We have talked with the owner of an underwater house. They saw no need to do a short sale, they felt it exposed them to more liability. The house has not been occupied for at least 9 months.

    They said, why fill out all the paperwork of a short sale and provide the bank with a schedule of all of our assets. Let them foreclose and they will have no current information on our current financial status.

    That being said, we got attached to the house/location.

    If only I had the stomach to attend a trustee sale. The amount owed is considerably more the value. The banks don’t seem to show their cards if they are going to accept a bid less than owed. To take the risks and financial wrangling to fund an auction purchase, there has to be some significant rewards.

    Wish they could have tried the short sale route, but I completely understand them protecting themselves first.

    Maybe it is time to attend a trustee sale as an observer to see how things go down..

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  15. 15
    ChrisM says:

    RE: Howard @ 14 – Seems like the major problem w/ the auction is the total lack of information about the condition of the property. And, of course, winning the 2nd lien position is just the icing on the cake…

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  16. 16
    ray pepper says:

    With Mortgage Servicers turning to GENIUSES like 5 brothers (http://www.fivebrms.com/ ) for asset preservation on the countless number of shadow inventory the comedy parade just gets better.

    But, make no mistake about it homeowners are getting DEALS of a lifetime to stay in their homes (30-70% principle cramdowns) and this will lessen foreclosures in a measureable factor.

    Upside down homeowners will only remain STUPID for so long and all the properties will be at value in about a decade through short sale, deed in lieu, foreclosure, and principle cram down. It will be a joyous ride with many righteous bagholders crying about just how unfair this collapse was.

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  17. 17
    Howard says:

    By ChrisM @ 15:

    RE: Howard @ 14 – Seems like the major problem w/ the auction is the total lack of information about the condition of the property. And, of course, winning the 2nd lien position is just the icing on the cake…

    I have had the opportunity to inspect the property myself and have been told by the owners that I can have a professional inspection done as well…

    I seem to have made a personal connection with them…

    As for the second, of course subject to verification. I do not believe there is a second lien.

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  18. 18
    Jonness says:

    By No Name Guy @ 4:

    Are banks (on average, median, mean) holding the foreclosures longer, shorter, about the same?

    Interestingly, my neighbor has went 4 years without a payment. The bank foreclosed on the house a year-and-a-half ago, and the neighbor is still living in the house. I’m not sure what’s going on, but $300K in HELOC’s and 4 years of free rent later, the house is still in zombie status. If this guy can make it another year, I’m going to walk over there and give him a gold medal.

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  19. 19

    By David Losh @ 12:

    RE: Jill Schlicke @ 9

    In my opinion people still think they better off by walking away, or staying, and not paying the mortgage.

    Assuming walking away and staying while not paying the mortgage are two options, anyone who walks away when they can stay needs to have their head examined. Why leave if you can stay for free?

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  20. 20

    RE: Lo Ball Jones @ 13 – The extra charges would be mainly RE taxes, insurance and the capacity charge. Usually any HOA fees are relatively low.

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  21. 21

    By ChrisM @ 15:

    RE: Howard @ 14 – Seems like the major problem w/ the auction is the total lack of information about the condition of the property. And, of course, winning the 2nd lien position is just the icing on the cake…

    Yep, exactly. The best houses to bid on would be ones where the owner was trying a short sale before the foreclosure. Even then you’re hoping they don’t damage the house during their last 20 days staying there.

    There are also other title issues besides bidding on a second without knowing it.

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  22. 22

    RE: Howard @ 17 – What he’s talking about is bidding on a second rather than a first position mortgage. When that happens, you own the property subject to the first mortgage, and have to pay it off to keep the property. That happens.

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  23. 23
    ray pepper says:

    RE: Jonness @ 18

    4 years without a payment? he’s a baby. Doesn’t even deserve a bronze, yet. Most I know are approaching their 6 year mark with no end in site and “hopefully” cash savings in the bank.

    I say you DO approach him and advise him IF and WHEN property ever forecloses hes good for at least another year or MORE if he remains on the hamster wheel trucking along with everything he knows. If he grabs a good RE Attorney plan on raising a family in the home and maybe initiate that new paint and carpet because he is going nowhere.

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  24. 24
    wreckingbull says:

    RE: ray pepper @ 23 – Just curious Ray, do most your friends who milk it like this still pay property taxes, or do they default there too? At what point does the county typically take action on a tax default?

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  25. 25

    2012 Seattle Home Buyers Buying Used Junk?

    “….Strichartz said he’s not surprised that these buyers were caught unaware. Converters must provide a copy of a report prepared by an architect or engineer, or a statement by the developer based on that, which describes “to the extent reasonably ascertainable” the condition of the structure and the mechanical and electrical systems and include a statement saying how long they might last.

    One of the problems, Strichartz said, is what “reasonably ascertainable” means. There is no standard definition. But that’s not all. Some developers “will hire somebody to look around, not open anything up, not do any kind of investigation,” Strichartz said.

    “The less they know, the less they can be liable for,” he said….”

    http://seattletimes.com/html/realestate/2002675027_condoconversion11.html

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  26. 26
    ray pepper says:

    RE: wreckingbull @ 24

    Wrecking bull you MUST be kidding. Upsidedown homeowners have taxes and insurance ALWAYS Escrowed. So the Lender picks up the tab each and every year on that. For those travelling down the hamster wheel who have NOT previously had their taxes and insurance escrowed they simply call their lender prior and request the lender to do this..HOWEVER, it must be done prior to treading the wheel. I do know of many who cancelled their insurance about two weeks after it was renewed so they could suck up the 1500 or so and then the Lender forced place insurance triggers. The upside down homeowner could careless if the insurance is now triple because the bank picks up the tab and they got about 1500 in the pocket.

    BTW lets clarify…”friends”…Some of my personal friends are travelling the hamster wheel but what I report is from the investor network of hamster wheelers that gives me updates every month of unique strategies people are employing….also all these “grass roots” campaigns seemed to have 500 Realty on all their email lists so I see what is happening in all the Courthouses and with activists Attorneys…….Its almost comical if it wasn’t so tragic..

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  27. 27

    By ray pepper @ 26:

    RE: wreckingbull @ 24 – Wrecking bull you MUST be kidding. Upsidedown homeowners have taxes and insurance ALWAYS Escrowed. So the Lender picks up the tab each and every year on that.

    Whether or not it’s escrowed wouldn’t affect whether a lender is going to pay the RE tax on a delinquent account. Either way, they’re advancing the funds, although for the first payment they may have a little bit of the debtor’s money in escrow still.

    To answer the question, I think the county can foreclose after three years, and they probably do so because that almost always brings a payment.

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  28. 28
    David Losh says:

    RE: wreckingbull @ 24

    The bank will step in to pay the taxes after a couple of years, no matter what. Otherwise the county has a priority lien, so the lender/servicer/investor doesn’t want that.

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  29. 29
    ARDELL says:

    Does anyone (Ray?) have experience with the foreclosure process for a VA Loan? Why would someone buy it at the Trustee Sale if the veteran has a one year right of redemption?

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  30. 30

    RE: ARDELL @ 29 – What makes you think they have a one year right of redemption? The VA used to claim that they could non-judicially foreclose and get a deficiency. (As an aside, really nice to see the VA treating vets so well. /sarc) The 9th Circuit slapped them down on that. I don’t know of any reason why the no redemption rule would be any different for a VA loan than a non-VA loan.

    But if there is a one year right of redemption, that would be no different than a judicial foreclosure, and people buy there.

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  31. 31
    ray pepper says:

    RE: ARDELL @ 29

    VA loan has never been an issue for us at Trustee Sale. However, Hamster wheelers have successfully utilized their “military” employment as a way to delay and keep the wheel moving and buy ALOT more time in the property for free. Its a VERY common tactic that bogs the foreclosure process down with bogust LES’s. IRS liens do cause some of us additional stress but if the deal is good its not an issue. IRS has not reclaimed, that I have witnessed, in Pierce County but I’m sure it has happened.

    David is correct. When the Lender receives notice of taxes not being paid on property the Lender begins the notification process to homeowner and HAS always stepped in far before the 9th hour in my experience.

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  32. 32
    ARDELL says:

    RE: ray pepper @ 31

    Thanks Ray.

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