Seattle Bubble

Aubrey Cohen is on a roll, reporting the uncomfortable truth about the local housing market (granted, with a slight sugar-coating). The latest report is on the ever-increasing number of foreclosures in the Seattle area, another fact that is conveniently ignored by Elizabeth Rhodes at the Seattle Times.

The Seattle area continued to follow the national trend in May of more people facing foreclosure, but still stayed below the national rate, according to statistics released Tuesday.The Seattle area, defined as King and Snohomish counties, recorded 832 foreclosure filings in May, up 9.5 percent from April and 76.6 percent from May 2006, according to RealtyTrac, an Irvine, Calif., company that tracks foreclosure filings.

The Seattle-area rate of one filing for every 1,176 households in May was well below the national rate of one per 656 households and good for 131st among U.S. metro areas, down from 128th in April.

The large year-to-year increase in May was mostly the result of an unusually low number of filings in King County in May 2006. Seattle-area filings are up 15.8 percent for the year through May from the same period last year.

Filings for the state in May were up 21 percent from April and 40 percent from May 2006. Its rate of one filing per 1,153 households put it 20th among states, up from 23rd in April.

Nationally, May’s foreclosure filings were up 19 percent from April and up nearly 90 percent from May 2006.

“After a barely perceptible dip in April, foreclosure activity roared back with a vengeance in May,” James Saccacio, RealtyTrac’s chief executive, said in a statement accompanying the numbers.

“Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year.”

It isn’t that difficult to do the math. Unaffordable mortgages + stagnating appreciation (or even *gasp* depreciation) = increasing foreclosures. For a graphical look at the recent spike in local foreclosures, I present this graph, derived from data harvested from foreclosure.com by the vigilant Bubble Markets Inventory Tracking blog. Credit for the idea for this graph goes to the statistical powerhouse Deejayoh, whose posts on the forum are not to be missed.

Click to enlarge

The green line represents the ratio of foreclosures to preforeclosures, which as you can see has shot up in the last few months from less than 10% to over 40%. Could this be the beginning of an unpleasant and rapid spike, or is there some reasonable, one-time explanation for the sudden jump?

I just keep going back to that simple equation above.

(Aubrey Cohen, Seattle P-I, 06.12.2007)

Thanks to the cessation of daily open thread posts during and after my recent vacation, participation in the forums has really taken off. However, when I announced on Monday that I would cease posting open threads for the foreseeable future, a number of you protested.

While I am certainly glad to see the forums well-utilized, I also don’t want to alienate those of you who have contributed some of the most interesting discussion to this site. When I post daily open threads, forum usage declines, but without open threads, some people don’t really participate as much. So I’m looking for some kind of middle ground.

Does anyone have suggestions for a way that we can facilitate open thread discussion without decreasing forum usage? I was thinking of reducing the open thread frequency, or placing it one click away from the front page (like the forums already are).

What do you think of either of those ideas, and what are some other things we might try?

Looks like I didn’t miss too much Seattle housing news while I was gone. I’m looking forward to seeing the April numbers next week. Here’s a summary of what I noticed while clearing my inbox:

• Seattle, Portland, and Dallas are the only cities of the 20 tracked by the Case-Shiller / S&P Index in which prices are still rising.
• Mr. Cohen discusses the latest Case-Shiller / S&P Index data in an article with more balance than usual. Don’t worry though, it still includes the requisite quotes from realtors about “bidding wars” and “soaring prices.”
• Foreclosures in the first quarter of 2007 in King County were up 37.6% from Q4 2006, and up 0.7% YOY.
• Ms. Rhodes does her part to pump up the local home salesmen’s egos with another installment of add some rah-rah fluff to an AP article.
• Apparently there’s a bit of a kerfuffle going on up in Snohomish County over the creeping spread of something that resembles the resulting offspring of an unholy union between condos and SFHs.

I’m also pleased to report that my nefarious scheme of going on vacation appears to have had the desired effect on the forums. Membership swelled by nearly 30%, and posting activity skyrocketed. Here are a few of the more popular and/or interesting threads:

• Boom on the eastside fueled by recent immigrants?
• What are the indicators signaling the end of the boom?
• To buy or not to buy????
• A Home prices versus inventory comparison

Therefore, I believe it is time to say goodbye to the open threads. For the foreseeable future, all user-driven discussion will take place on the forums. Thanks for your participation. I really enjoy reading what everyone comes up with.

There are lots of great conversations going on over at the Seattle Bubble Forums, why don’t you join in too? Here’s a sampling of what’s going on over there:

• Alan offers some perspective on half-million-dollar homes.
• A couple of threads toss out predictions for 2007
• Matthew points out that stocks may be headed for a big fall.
• Shack asks how long would it take for a flatlined market to return to “normal?”

These are just a few of the conversations that are going on. So why don’t you head on over and add your voice to the discussion?

As many of you may have noticed, the daily open threads have had an increasingly large number of comments lately. I don’t know about anyone else, but for me they become rather difficult to follow after a few dozen comments. Plus, if someone wants to bring up a new subject 30 posts in, it’s quite easy to be drowned out.

Well thankfully there is a solution. For your pleasure, I have created the Seattle Bubble Forums. It’s like an open thread, only a hundred times better!

I’m hoping that these forums can be a place where people can get together to share information and learn from each other. It’s up to you to make them the most they can be.

I don’t necessarily plan to stop posting Open Threads on the blog, but if the majority of people move the active discussions over to the forum, I will definitely reduce the frequency of open thread posts, and possibly eliminate them all together. We’ll see how it goes.

Have fun.