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.

29 responses to “Foreclosures Start 2013 Elevated”

  1. softwarengineer

    Perhaps Shadow Inventory [Bank Held Up Foreclosed Units] is a Moot Point in Seattle?

    The real culprit to cleaning the toxic loans out the banksters’ secret safes is undocumented delayed foreclosures [how could we ever get an arm around them, we can't count 'em]….once we clean the known/undocumented toxins out the financial system…let prices adjust downward to reality when they’re all listed…then SWE will support a “real” possible bottom to the real estate price degradation since 2007.

    Until then, put your fingers on the banksters’ Ouja Board pointer, when it comes to foreclosure predictions in Seattle.

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  2. No Name Guy

    Zero Hedge has a fresh piece up on this very topic……

    For buyers out there, you’d BETTER BUY NOW OR BE PRICED OUT FOREVER. YES, go into those multiple bid situations with an escalator clause…..you just have to get the place NOW, NOW, NOW.
    /snark

    http://www.zerohedge.com/news/2013-02-14/boomerang-foreclosures-are-back-bernankes-second-housing-bubble-begins-pop

    More seriously, be patient……let the market come to you. Save, save, save….get yourself out of debt. Keep the powder dry.

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  3. Kary L. Krismer

    RE: No Name Guy @ 2 – That’s the best Zerohedge piece I’ve seen, and the only one I remember that was good. Not only does he recognize the impact of legislation on foreclosure activity, but he also went back and apparently figured out prior legislation from a few years ago also affected foreclosure activity. Very good!

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  4. softwarengineer

    RE: No Name Guy @ 2

    LOL Zero Hedge is a Good Name for That Snake Oil Sales Company

    A Financial Times news story on Hedge Funds [its internet news costs a fee] was reported to me and these “trillionaire” [yes trillions] Hedge Fund bankster managers run a phony board and company in like the Calluse [sp?] Island to safe [???] harbor our retirement funds. As the funds go bankrupt these trillionaire shadow managers still collect their billions in fees and we go down the toilet like Enron…

    Forget the Trilateral Commission, CFC, etc…..this is where the organised crimelords “really” set up shop…

    I call ‘em the hedge hogs and us American citizens are pig slop they gobble down….

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  5. softwarengineer

    RE: softwarengineer @ 4
    Update to Blog Above:

    Zero Hedge OK, Realty Trac is the snake oil company in cahoots with the banksters….

    Perhaps zero hedge could symbolically mean we’re not part of the hedge hog shadow bankster managment team…LOL

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  6. Plymster

    RE: No Name Guy @ 2 – Pish, posh. Shadow inventory and contrived inventory suppression is a myth, and foreclosures will have no effect on the housing market here in Seattle.

    At least that’s what I’ve been told every time I’ve posted something about it here.

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  7. Kary L. Krismer

    RE: Plymster @ 6 – Right now more foreclosures (REOs) would help.

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  8. Jess

    No increase in income, toxic mortgages, it’s not rocket science.

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  9. whatsmyname

    RE: No Name Guy @ 2RE: Plymster @ 6

    You are the smartest guys here. Please promise me you’ll keep renting.

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  10. Kristian

    Something doesn’t add up for me here.

    This post: About 1000 king county foreclosure sales in jan.
    Post from feb 7th: 9% of jan sales were bank owned.
    Post from feb 5th: about 1450 king county sales in jan.

    Based on the 1000 and 1450 numbers I would expect bank owned sales (=foreclosure sales) to be a percentage around 67% (which would be incredibly high, using the word “incredibly” in the literal sense).

    Does “bank owned sales” not include all foreclosures? Or is there some other fact about how these numbers fit together that I’m missing?

    It’s also interesting to compare the inventory of about 3000 king county properties (feb 5th post) to the foreclosure sales of about 1000. Do we really have 1 foreclosed property sale for every 3 that go on the market at the moment? Also sounds like an incredibly high ratio.

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  11. Ira Sacharoff

    RE: Kristian @ 10
    Kristian,
    As I understand it, this post says there were about 1000 NTS’s(Notice of trustee sale), not foreclosure sales. This is not the completion of the foreclosure sale, but the delivery to the homeowner of the trustee’s intent to foreclose and sell the place at auction. At the auction, some of these homes will be sold to investors, etc, but some will revert to the lender and later be put for sale and ultimately become a bank owned sale.When there’s a big increase in the number of NTS’s, a reasonable expectation might be that in a few months, the number of bank owned houses on the market will be larger. But a lot of things can happen.

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  12. Macro Investor

    By Ira Sacharoff @ 11:

    RE: Kristian @ 10
    Kristian,
    As I understand it, this post says there were about 1000 NTS’s(Notice of trustee sale), not foreclosure sales. This is not the completion of the foreclosure sale, but the delivery to the homeowner of the trustee’s intent to foreclose and sell the place at auction. At the auction, some of these homes will be sold to investors, etc, but some will revert to the lender and later be put for sale and ultimately become a bank owned sale.When there’s a big increase in the number of NTS’s, a reasonable expectation might be that in a few months, the number of bank owned houses on the market will be larger. But a lot of things can happen.

    I think the reasonable expectation is once the pipeline is filled, there should be 1000 bank owned properties or foreclosures per month entering the market. Anything less and it is proof the banks are holding on to their inventory to manipulate prices.

    If you just take a quick gander at foreclosure radar, it is fairly obvious that this “shadow” market is 3x the size of the MLS listings. Just pick a few areas and count.

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  13. David Losh

    RE: Macro Investor @ 12RE: Kristian @ 10

    That’s right, the short sale foreclosure market has been running about 25% of the market place for a couple of years or longer.

    I think banks are watching this trend nationally and setting more reasonable pricing for foreclosures, and short sales. The opinion I’m forming is that banks will lighten lending requirements to make more loans based on the value of the property.

    By value what I mean is they are watching these “distressed” sales and setting pricing on what they can get for these properties at quick sale foreclosure auctions.

    Banks will come up with a formula for pricing of properties, and that minus the down payment is what they will lend. They will simply change lending standards.

    At 25% of the market place, and the fact banks can deny appraisals is a big stick to set the market place.

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  14. Plymster

    RE: David Losh @ 13 – Indeed. Part of Obama’s SotU speech was aimed at lowering lending standards (per a recent Bloomberg article):

    “Right now, overlapping regulations keep responsible young families from buying their first home,” Obama said Feb. 12. “What’s holding us back? Let’s streamline the process, and help our economy grow.”

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  15. Jillayne Schlicke

    I use this site as a quick way to get a visual on REO inventory coming our way. The scheduled trustee sale numbers were very low for the past few months and now they’re coming back up. It’s not all trustee sales, just the ones handled by Northwest Trustee Services. They are the largest trustee in the five-state Northwest region but not the only one so it’s not a perfect picture but it’s something.
    http://www.usa-foreclosure.com/state.aspx?s=WA&sN=Washington

    Go to your county of choice and then hit the “sale date” drop down and just look at the numbers without clicking through, scheduled by date. They are going up.

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  16. Kary L. Krismer

    By Ira Sacharoff @ 11:

    RE: Kristian @ 10
    Kristian,
    As I understand it, this post says there were about 1000 NTS’s(Notice of trustee sale), not foreclosure sales. This is not the completion of the foreclosure sale, but the delivery to the homeowner of the trustee’s intent to foreclose and sell the place at auction. At the auction, some of these homes will be sold to investors, etc, but some will revert to the lender and later be put for sale and ultimately become a bank owned sale.When there’s a big increase in the number of NTS’s, a reasonable expectation might be that in a few months, the number of bank owned houses on the market will be larger. But a lot of things can happen.

    That is basically correct, but I would also note many sales never occur. Either the owner brings the bank current or files Chapter 13. Also, there can be more than one NTS on the same property in a given period.

    To attempt to do the analysis that was done you’d go off of trustee’s deeds, and then the discrepancy between trustee’s deeds and REOs would be largely due to to third parties buying at the sale.

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  17. Kary L. Krismer

    By Macro Investor @ 12:

    I think the reasonable expectation is once the pipeline is filled, there should be 1000 bank owned properties or foreclosures per month entering the market. Anything less and it is proof the banks are holding on to their inventory to manipulate prices..

    No, it’s just proof you don’t know what you’re talking about. Again the possibilities include:

    1. Multiple NTS on a single property.
    2. The owner curing the default (including curing through a Chapter 13, a sale or short sale).
    3. Someone else (e.g. Ray) buying at the foreclosure sale.

    I should also mention that we typically deal with data for SFR sales, and a lot of these NTS documents probably pertain to condos, and a few more to vacant land, commercial, etc.

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  18. Kary L. Krismer

    By David Losh @ 13:

    That’s right, the short sale foreclosure market has been running about 25% of the market place for a couple of years or longer.

    Not really. Most of 2011 was probably much worse than that, getting at least as high as 40%. 2012 was better, but January 2013 was over 35%.

    Again, the percentages vary a lot based on seasonal factors, because REOs and short sales don’t tend to be seasonal, while total sales are. That’s the main reason the median has been fluctuating so much the past few years.

    Percentages from NWMLS and other sources, but not compiled by or guaranteed by the NWMLS.

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  19. David Losh

    RE: Kary L. Krismer @ 18

    Irrelevant to my point that these “distressed” sales are the market place.

    People paying over the amounts offered at trustee sales are taking a risk of being under water soon, the way I see it.

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  20. corndogs

    RE: No Name Guy @ 2 – Here’s a quote from the article “the sad reality is that the US consumer has less and less disposable cash flow, and when one adds such $1 trillion + debt items as student debt (now greater than all credit card debt combined), has a soaring debt load to add.”.

    Here’s the US debt clock,http://www.usdebtclock.org/

    notice the item 6th from the bottom far left “Total Personal Debt”…notice that it is plummeting and has been for quite sometime. So the US consumer DOES NOT have a soaring debt load, they have a diminishing debt load….

    Also, it’s common knowledge that Americans have been saving their money since the bust as shown in the following chart.

    http://www.creditwritedowns.com/2010/02/chart-of-the-day-u-s-savings-rate-over-last-60-years.html

    So the guy who wrote that article is a lot like David Losh, an idiot! The whole article is BS.

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  21. corndogs

    RE: David Losh @ 19 – “the way I see it” Boy, that packs a lot of weight, thanks for sharing.

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  22. Kary L. Krismer

    By David Losh @ 19:

    RE: Kary L. Krismer @ 18

    Irrelevant to my point that these “distressed” sales are the market place.

    People paying over the amounts offered at trustee sales are taking a risk of being under water soon, the way I see it.

    25% is not the marketplace.

    Also, people buying in private transactions always pay over the amount at trustee’s sales. Historically trustee sales are said to only get 80% of FMV, at best, on average. But technically you’re right because every buyer of real property throughout history has been at risk of being underwater after the sale, if by underwater you mean having the value of the property decline. The only way to avoid financial risk is to not own anything.

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  23. David Losh

    RE: Corndogs @ 20

    That’s deleveraging by foreclosure, or saving by not paying the mortgage while you wait for the foreclosure.

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  24. No Name Guy

    RE: whatsmyname @ 9
    Ahem….actually, I OWN my home. As in own it, no mortgage….free and clear.

    And I’m looking to pick up a rental at some point, however I just don’t like buying into a totally manipulated market when I can see with my own eyes, in my own ‘hood (south Sno Co), how foreclosed homes are, in fact, being held off the market.

    Go right ahead, today is the PERFECT time to buy for you. Put down 3.5% with that FHA and all will be well.

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  25. whatsmyname

    By No Name Guy @ 24:

    RE: whatsmyname @ 9
    Ahem….actually, I OWN my home. As in own it, no mortgage….free and clear.

    And I’m looking to pick up a rental at some point, however I just don’t like buying into a totally manipulated market when I can see with my own eyes, in my own ‘hood (south Sno Co), how foreclosed homes are, in fact, being held off the market.

    Go right ahead, today is the PERFECT time to buy for you. Put down 3.5% with that FHA and all will be well.

    Holy smokes, even you don’t take your advice seriously! You didn’t get out from under that equity bomb even as you knew it would explode? And now you are looking for a rental? By your description of your neighborhood, the house you are living in might be a good candidate.

    I don’t like to disclose a lot about my personal identity, but it certainly sounds much better than that.

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  26. No Name Guy

    RE: whatsmyname @ 25

    Well “What”, I bought nearly 20 years ago, you know, back before things were totally hosed up by The Bernake and his predecessor. You know, I wasn’t one of those twits that ATM’ed all the phantom equity out of their place to blow on Vegas trips, Bass Boats and over sized diesel trucks. I wasn’t one of those idiots that kept moving up ever 3 years, into a more expansive and expensive place, paying the 10% cost of the churn. Nope….I was, from day one, out to OWN my home. I put a healthy down payment in, with solid credit and career, paid on time every month, meanwhile saving, saving, and saving some more until I had a wad to go tell the bank to kiss my arse, here’s your money, give me my reconveyance, I OWN this sucker free and clear.

    Furthermore, since I need a place to live anyways, there is / was no sense in selling the lowest cost option I have – my fully paid for home. Taxes and insurance are a couple hundred a month. Upkeep – call it one percent / year is only another couple hundred a month. Let’s see….apartments that are on the order of 500 / month….Hmmmm…..I could trade my fully paid for, fully updated home for a rat hole in a crappy part of town. Nope…..not a good trade.

    And yes, I AM looking for a rental….AT SOME POINT. Not now, not in this manipulated market. I am in fact taking my own advice and being patient, watching, waiting, learning, observing, husbanding my cash and waiting until there is metaphoric blood in the streets to buy. Ben and company are manipulating interest rates, housing inventory, the stock market as well as housing prices. At some point as is the case with EVERY system that can’t be sustained, they won’t be able to keep it up and it’ll all come crashing down. That’s when I’ll swoop in and pick off a good buy.

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  27. Kary L. Krismer

    By No Name Guy @ 26:

    RE: whatsmyname @ 25 – Well “What”, I bought nearly 20 years ago, you know, back before things were totally hosed up by The Bernake and his predecessor. You know, I wasn’t one of those twits that ATM’ed all the phantom equity out of their place to blow on Vegas trips, Bass Boats and over sized diesel trucks. I wasn’t one of those idiots that kept moving up ever 3 years, into a more expansive and expensive place, paying the 10% cost of the churn. Nope….I was, from day one, out to OWN my home. I put a healthy down payment in, with solid credit and career, paid on time every month, meanwhile saving, saving, and saving some more until I had a wad to go tell the bank to kiss my arse, here’s your money, give me my reconveyance, I OWN this sucker free and clear.

    Keep up those unamerican activities and pretty soon you’ll have to start worrying about drone attacks. ;-)

    Furthermore, since I need a place to live anyways, there is / was no sense in selling the lowest cost option I have – my fully paid for home. Taxes and insurance are a couple hundred a month. Upkeep – call it one percent / year is only another couple hundred a month. Let’s see….apartments that are on the order of 500 / month….Hmmmm…..I could trade my fully paid for, fully updated home for a rat hole in a crappy part of town. Nope…..not a good trade.

    I would point out that your house is actually earning you un-taxed income. The asset produces benefits, specifically those related to being able to live there. It’s probably something valued at between $1,000 and $2,000 a month, but if you had to actually pay those sums out it would be in after tax dollars, so the real value is probably something between $1,200 and $2,600, depending on your income levels.

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  28. To the Students from the April 19, 2013 Foreclosure Field Trip at Sea King Co Realtors Bellevue | ceforward.com

    [...] are some recent statistics from Seattle Bubble on Notice of Trustee Sales, Trustee Deeds, and Warranty Deeds for the [...]

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  29. To the Students from the June 21, 2013 Foreclosure Field Trip at SKCAR Bellevue | ceforward.com

    [...] are some recent statistics from Seattle Bubble on Notice of Trustee Sales, Trustee Deeds, and Warranty Deeds for the [...]

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