Seattle Bubble

As a follow-up to last Friday’s foreclosure news, let’s take a look at a couple charts of local foreclosures.

I contacted the folks at RealtyTrac to request historical foreclosure data for the Seattle area, and they were kind enough to provide me with their foreclosure data for King + Snohomish counties going back to April 2005. Here’s a long-term chart:

Click to enlarge

You can see that since July’s data showing 1,030 homes in some state of foreclosure (Default, Auction, or REO), we have been in uncharted post-2005 territory. August’s 1,185 foreclosures pushed even further into record highs.

Here’s a chart comparing the foreclosures for each month:

Click to enlarge

We had a couple big spikes in November and December last year, then early this year things seemed to settle down close to 06-07 levels. But since June foreclosures have been noticeably shooting up.

Now that I’ve got this historical data as a basis, these will probably enter the rotation of graphs that are updated monthly.

Right on schedule, as home price declines in Seattle really start in earnest, foreclosures begin to “soar.”

Seattle-area foreclosures were up 54 percent in August from a year earlier, according to a new report.

The area, defined as King and Snohomish counties, had 1,185 properties with foreclosure filings, up 15 percent from July, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosures.

The area’s rate of one filing for every 906 households put it 133rd out of 230 areas RealtyTrac ranks, up from 147th in July.

Statewide, properties with filings were up 64 percent from a year earlier and 15 percent from July. Washington’s rate of one filing for every 851 households put it 21st among states, up from 26th in July. U.S. foreclosures were up 27 percent from a year earlier and 12 percent from July, with one in every 416 households receiving a filing.

Also note coverage in the Everett Herald:

Snohomish County no longer seems immune from the wave of foreclosures that have affected homeowners nationwide, as the number of filings last month rose 39 percent compared with a year ago.

Across Washington, foreclosures rose by 64 percent last month, while the growth in filings across the nation was only 27 percent, according to RealtyTrac Inc. That national number was significantly lower than in previous months.

“There were some areas that were insulated a little bit before that are now catching up,” said Daren Blomquist, spokesman for RealtyTrac.

I guess we had plenty of folks jumping into dangerous loans here in the Puget Sound afer all.

(Aubrey Cohen, Seattle P-I, 09.12.2008)
(Eric Fetters, Everett Herald, 09.12.2008)

Wait a minute… I thought only California had lots of people that took out dangerous loans, and are now at risk of foreclosure.

Counselors overwhelmed with calls from desperate homeowners

Housing advocates and lending counselors say they’re being overwhelmed with calls for help from desperate Seattle-area homeowners, many on the brink of foreclosure.
…
As interest rates reset, thousands of Seattle-area homeowners are facing skyrocketing mortgage payments – payments many people just can’t afford.

Hmm…

(Linda Byron, KING 5 News, 08.28.2008)

Interesting story from Kirsten Grind over at the Puget Sound Business Journal: Experts see more subprime-loan pain ahead

Another big wave of subprime mortgages will see interest rates reset to a much higher rate over the next six months in the Seattle area, an indication that the Puget Sound region might still be facing further economic trouble.

The large number of resets mean it’s possible that foreclosure rates could continue to rise across the state as homeowners struggle to make higher payments. Banks, already weighed down by bad loans, could face an even more hefty load of troubled mortgages on their books, according to experts.

The result could be a damper on some sectors of Washington’s economy — including the housing market — which has so far fared better than many states in recent months.

About 12,600 subprime loans are scheduled to reset in the Seattle-Tacoma-Bellevue area over the next six months, or about 52 percent of the subprime loans left to reset in the area…

In addition, a large chunk of Alt-A loans — known for little or no income documentation — will start resetting with the possibility of higher rates in about a year, a trend that mortgage experts are watching warily because less is known about their loan performance.

Reading the entire article, I can’t help but see an eerie similarity to what has already happened down in California. The “experts” quoted in the article claim that since home prices are only down 5-10% here, loan resets won’t be as big of a deal as they have been in the Golden State. But when most people put 0-3% down, it seems to me that a 5-10% drop in prices is more than enough to send those people into foreclosure.

I don’t think the Seattle-area will see as many foreclosures as San Diego or Sacramento, but I do think we’ll have our fair share, which will probably be more than any point in Seattle history.

(Kirsten Grind, Puget Sound Business Journal, 08.22.2008)

Foreclosures in the Seattle area were up 41% year-over-year, according to a report from RealtyTrac.

Seattle-area foreclosures continued to rise in July, according to a new report.

The area, defined as King and Snohomish counties, had 1,030 properties with foreclosure filings, up 41 percent from a year earlier and 13 percent from June, according to a Thursday report from RealtyTrac, an Irvine, Calif., company that tracks foreclosures.

The area’s rate of one filing for every 1,043 households put it 147th out of 230 areas RealtyTrac ranks, down from 145th in June.

Statewide foreclosures were up 56 percent from a year earlier and 0.7 percent from June. Washington’s rate of one filing for every 977 households put it 26th among states, down from 22nd in June. U.S. foreclosures were up 55 percent from a year earlier and 7.9 percent from June, with one in every 464 households receiving a filing.

Here’s a chart of King and Snohomish foreclosure data since late 2006, courtesy of data collected from Foreclosure.com by the Bubble Markets Inventory Tracking blog:

Click to enlarge

I feel that this trend will continue for a while.  As home prices continue to drop, many of the dangerous loans made in 2006 and 2007 will become foreclosures.

(Aubrey Cohen, Seattle P-I, 08.14.2008)

Foreclosures are still on the rise in Washington State and in the Seattle area, according to the Seattle Times.

Washington state foreclosure filings were up 69 percent last month compared with the previous June and up almost 10 percent from May, as the mortgage meltdown continues despite government and private efforts to help struggling homeowners.
…
There were 2,742 new filings statewide last month, a 155 percent increase over new filings in June 2005.

Of the three Central Puget Sound counties, foreclosures again hit Pierce County hardest, with one in 483 households in trouble. In Snohomish County, it was one in every 966.

King County fared best, with one household in 1,265 in trouble.

Here’s a chart of King and Snohomish foreclosures since late 2006, courtesy of data collected by the Bubble Markets Inventory Tracking blog:

Click to enlarge

Are foreclosures skyrocketing? No. This is because for the most part, foreclosures are a trailing indicator, rising significantly only after consistent price declines set in. If prices around Seattle continue to drop as they have since late last year, I expect that foreclosures will begin to rise significantly.

(Elizabeth Rhodes, Seattle Times, 07.10.2008)