Foreclosures Still Rising Rapidly Around Puget Sound

Time for our February update on Foreclosure activity in King, Snohomish, and Pierce counties. First up, the Notice of Trustee Sale summary:

February 2009
King: 838 NTS, up 99% YOY
Snohomish: 414 NTS, up 100% YOY
Pierce: 663 NTS, up 59% YOY

Here’s a simple look at how February’s foreclosures compare to the same month last year in each of the three counties:

Notices of Trustee Sale

Next let’s look at the percentage of households that received a Notice of Trustee Sale (based on household data for each county from the American Community Survey, assuming linear household growth between surveys):

Households per Foreclosure

King County came in at 1 NTS per 933 households, Snohomish County had 1 NTS per 633 households, and Pierce had 1 NTS for every 446 households. February’s level was second only to the all-time highs set in January in all three counties.

For comparison, the latest data from RealtyTrac—whose definition of foreclosure includes Notice of Default, Auction, Notice of Trustee Sale, and Real Estate Owned—shows King County with 1 foreclosure for every 841 housing units, Snohomish at 1 foreclosure for every 576 housing units, and Pierce with 1 foreclosure for every 453 housing units. According to RealtyTrac’s full rankings for February, Washington’s statewide foreclosure rate was the 25th highest in the nation.

Following are charts of King, Pierce, and Snohomish County foreclosures from January 2000 through February 2009, with uniform y-axis scales to provide easier comparison. Click below to continue…

Notices of Trustee Sale - King

Foreclosures backed off their highs ever so slightly in King County, even as median price drops posted new lows.

Notices of Trustee Sale - Snohomish

Same story in Snohomish County, except that the median price actually ticked up slightly while the foreclosure notices dropped.

Notices of Trustee Sale - Pierce

Pierce County saw the smallest year-over-year increase in foreclosures, but is already well ahead of King and Snohomish in terms of the percentage of households in foreclosure.

Coverage elsewhere:
Seattle P-I: More owners losing homes

Note: The graphs above are derived from monthly Notice of Trustee Sale counts gathered at King, Snohomish, and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, refer to this post.

For the full legal definition of what a Notice of Trustee Sale is and how it fits into the foreclosure process, check out RCW 61.24.040. The short version is that it is the notice sent to delinquent borrowers that their home will be repossessed in 90 days.

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

47 comments:

  1. 1
    Kary L. Krismer says:

    You were a few minutes too late posting this. I just posted in last month’s thread that the number of Trustee’s Deeds was 233 for February. That’s up 3 from January.

  2. 2
    Ray Pepper says:

    BANR bank is toast.

    http://finance.yahoo.com/expert/article/moneyhappy/147594

    “There is pent up demand”–from who? 1 family? Same old statements not based on any facts. I say there is pent up demand for foreclosures at 50% off……NOT NEW CONSTRUCTION!

    Article is hopeful people will buy and builders will build. What about the Bankruptcies? Short Sales? Foreclosures? Commercial? Depreciating assets?

  3. 3
    Kary L. Krismer says:

    Does anyone know what’s going on with Viking Bank? I’m only showing three deeds of trust in King County since 2/23/09, and at least one of them was a refinance of their own prior loan. Homestreet has over 100 transactions during that period. In prior years Homestreet did more business, but not on that scale. Viking had 16 transactions the same period last year.

  4. 4
    mukoh says:

    Ray,
    A friend of mine who operates a new homes marketing group with over 250 listings sold 19 of them in a week on a program from Sterling Bank of 4% 30yr fixed. Previously they were only clipping 5 a week in the slowest time. So saying that there isn’t demand out there for $320k 2000sq ft new construction in bothell with 4% 30yr fixed might not be so wrong.

  5. 5

    HI KARY

    Viking Bank…..hmmmmm, haven’t heard of that one. An interesting thing though about banks lately, there seems to be a plethora of them in the Seattle area and many names I’ve never heard of before. You’d think in this era of $1.37/share Citi stock value, and with banks on the brink; they’d be buying each other out left and right; leaving us with a mere handful of bank names to recognize.

    But the opposite seems true, perhaps the banks have such little worth, who’d buy them out?

  6. 6
    Kary L. Krismer says:

    Tim, do you have a graph of unemployment rates that could be put below the second graph above (I think it would be too confusing on the same graph because the percentages are too different). It would be interesting to see the correlation between unemployment and foreclosure notices.

  7. 7
    David Losh says:

    RE: mukoh @ 4

    That program is used by a builder in South Everett also. The guy in my office put 19 homes on the market and sold five the first couple of weeks. His price point started at $309, then lowered to $285K to $299K. I havene’t check in the past couple of weeks, but I did refer him a land deal.

    There are segments of the buying public that buy with the idea they will pay the property off. The price is important, but getting a good deal you can pay off is more important.

  8. 8
    The Tim says:

    RE: Kary L. Krismer @ 6 – I’m sure I can whip something like that up. Probably not until tomorrow though.

  9. 9
    DrShort says:

    I’m not sure how anyone can claim we are at or just “a few months” from bottom with the foreclosure rates rising like they are.

  10. 10
    Kary L. Krismer says:

    RE: DrShort @ 9 – You just don’t have the extensive experience obtained from being in all parts of the country at different times! ;-)

    Something about your post made me realize I should run the trustee sale numbers from last year. February 2008 was 100 vs. 233 this year. So the increase as a percentage basis was even worse than the increase in notices.

  11. 11
    Teacher_Greg says:

    RE: Kary L. Krismer @ 10

    Kary, judging by the rapidity and frequency with which you post can one safely assume that there is not much going on in the real estate world?

  12. 12
    Kary L. Krismer says:

    RE: Teacher_Greg @ 11 – As I’ve explained before, a lot of what I do involves tedious work in front of a computer. This is a distraction from that. Even when I was very busy at the end of 07 and beginning of 08 I could post frequently to various sites–I just wasn’t posting here back then.

    Also, the fact that I can type and read fast probably helps.

  13. 13
    mukoh says:

    RE: David Losh @ 7 – Are you referring to Rose?

  14. 14
  15. 15
    The Tim says:

    RE: Ray Pepper @ 14 – This is exactly the kind of comment that I resurrected the open threads for. Please keep off-topic comments there.

  16. 16
    Ray Pepper says:

    sorry! Just can’t wait for tonights airing! I got excited!

  17. 17
    td says:

    Ray @ 2, mukoh @ 4, david losh @ 7

    I ask the same question.

    How can the bank justify the business case to lend to their builder clients meanwhile entire brand new tract communities are put up for auction, inventory is at record highs, and foreclosures/nts are also near historical highs? How cheap are builders becoming that their costs can compete with the falling prices of existing inventory?

  18. 18
    Andy says:

    Pierce County is in ruin, looking in Gig Harbor – the whole place is for sale
    While I absolutely love the Harbor – this is not Westchester NY, or Fairfield CT – but you see the same prices
    This is Gig Harbor, WA – the only people that can afford homes are doctors that do not know any better
    Tacoma (employment center next door) is a dying city and Bremerton is a dump
    While the price reductions are dramatic, they need to accelerate
    I guess all we can do is to wait and wait till homeowners+ real estate agents+banks recognize that Pierce County is finished…

  19. 19
    Ray Pepper says:

    td all these builder communities that you see the land has been bought years ago. The banks obviously have written them DOWN on the books which is reflected on their current pps of COLB, BANR, RPFG. Venture Bank got nailed on holding the common of FRE and FNM not on residential lending. With all this land essentially owned by the banks, with much of it permitted and ready to go, ACTION is required. Incentives galore will be offered in a “hope” that the homes get purchased.

    The banks know everyone enjoys a NEW home. Furthermore a great rate on a MTG may stimulate the economy. I assure you this. Until they offer Mtg cram downs on a HUGE scale the foreclosures will continue. People WILL NOT stay in their homes when they are upside down greater then 15%. I don’t care if people get 2% Mtg’s. At the 1st sign of problems the home will be short saled or foreclosed upon.

    Nevada is 2 years ahead of us and I have seen it over and over. People do NOT hold onto their upside down (assets). You can BANK on that! Banr, RPFG, and Colb will not make it

  20. 20
    Ray Pepper says:

    Yes, Andy. Nobody loves Gig Harbor more then I. I go across the bridge twice a week. I still say there is no better place to live in the State! Just keep watching for GEMS like a do every week. My desire is to return to Sea Cliff and maybe even buy the home back I sold. I bought it for 283k and sold it for 469k. I would buy it back for 300k. It still sits on the market…and sits….and sits…..from 599k to now 479k I believe. It WILL sell for 350k+. So I know I will NOT be a Buyer of 1312 Madrona Way NW in this lifetime………But, then again…………….you never know.

  21. 21
    Kary L. Krismer says:

    RE: td @ 17 – I wouldn’t assume that the builders are making a profit. I would assume that the bank making the consumer loan is probably the same one who made the builder loan, and they’re probably just trying to get the thing closed out. Banks are putting a lot of pressure on builders from what I’ve heard.

  22. 22
    Kary L. Krismer says:

    RE: Teacher_Greg @ 11 – BTW, even though this is off topic (sorry Tim) I don’t really consider reading and responding to posts here to be unrelated to what I do for a living. I’m actually a bit more amazed that some agents not only don’t follow blogging sites more, and that a lot of those don’t even seem to follow the market at all. Not every agent has to know that less than 700 SFR units sold in King County in January and February, or foreclosure trends, or how many listings are vacant, etc., but they should have some similar stat that they’re aware of that relates to what they do. Many don’t.

    The stuff I do over in the P-I Soundoffs that are not related at all to real estate–that is purely for fun. But this and the rest of it is, IMHO, part of what being an agent is about.

  23. 23
    Dalya says:

    del

  24. 24
    HCB says:

    RE: Kary L. Krismer @ 22

    Yeah, I work at a software company and we’re expected to spend time on blogs and newsgroups as a source of customer feedback about our products. I’m glad that you contribute to the discussion here despite occasionally being picked on for it.

  25. 25
    mukoh says:

    RE: td @ 17 – TD, they are lending to get rid of vertical inventory as quick as possible. They are not lending to builders anymore for new starts. That portion of lending is down at least 80%+

  26. 26
    Andy says:

    Ray,

    Most likely you will buy it back for $85K
    Lets pray for a complete real estate collapse
    Considering that nobody can afford any of these homes, we need far lower prices so our nation can save+ prosper
    No reason people should take out 30 year mortgages, these should be outlawed
    Only 15 year terms and only for people with >750 FICO…. I wonder what that would do for the market – I think banks would be far better capitalized and people would be free of enormous liabilities..we should outlaw HELOCs too.
    Ive got some cash; would be nice to pay in full 500K for a 5000sq ft waterfront Gig Harbor mini mansion, no?
    Too bad the market is not there yet, but SOON!!!

    HAHAHHAHAHA – BURN!!!!!

  27. 27
    Andy says:

    Banner, Sterling, Timberland, Pierce Commercial are all messed up
    Half the short sales I am looking at are held at these institutions
    My buddy works for a financial services hedge fund (in NYC), and lets just say he is not bullish on Puget Sound Banks; primarily due to the 3rd rate of management
    You should see the bios of the idiotic management (on their websites); even he is shocked with the quality of talent these lower level banks get. Usually, uneducated good ol boys that have an inside track
    Most have poor educational backgrounds, and have big whopping beards; obviously unprofessional for bankers
    Could you imagine taking a loan from a poorly educated puget sound banker with a beard…?

    Off subject – Damn, I don’t know why Microsoft or Boeing stay here; considering what the BA union just wrecked the Company (BA stock is around 30 bucks)
    Wait – MSFT is run by east coasters (get their talent from outside the Puget Sound area)….and BA is head quartered in Chi-Town…
    Thoughts….?

  28. 28
    David Losh says:

    RE: td @ 17

    A little more simply, Sterling made loans to builders.

    The dirt deal I referred to another agent has a construction loan from another small bank. The land was sold for $380K, but the bank lent $490K. $10K went back to the bank in up front fees and the other $100K was for site development costs. My feeling is that other properties were put up as collateral. My client says no, but he is sweating.

    Now that the market has turned the site development is not complete and no one, wants the dirt. The bank is the one that is stuck, they have no recourse. Even if they end up with the dirt they would have to find the builder and get some one interested and blah, blah, blah.

    Instead the bank may take a write down on the dirt and put together a loan program that looks great on paper. 30yr Fixed at a low rate returns good sold salable paper or can be added to a portfolio.

  29. 29
    alex says:

    RE: Andy @ 26

    Andy is a man of simple tastes… he likes dynamite, gunpowder and gasoline.

  30. 30
    David Losh says:

    RE: mukoh @ 13

    No, I talked with a woman in Rose’s office a few months ago.

    Rose Construction is a very conservative builder. They are an excellent product. By far one of the best purchases that can be made. They are a fair and square deal. The margin is low compared to the high quality of the construction from foundation, to framing, to finish.

    If they chose to discount there are investors who may buy. The feeling I have and that I expressed is that if any one wants a new construction home they would be dollars ahead by buying a Rose Construction Home.

    The reputation is impeccable and the proof is in the longevity of the product.

  31. 31
    S-crow says:

    Re: Banks working with TARP funds & builders to move inventory.

    Call it a strong hunch, but I’m guessing many local banks are choosing not to foreclose on land and builders (at least in the numbers that they could). People can make up their own minds as to why.

  32. 32
    Scotsman says:

    If banks are already on the hook for the land, they may find it makes sense to go ahead and fund a building project and claw back some of the land value when the whole project sells. Probably depends on the area and what the level of activity is.

  33. 33
    David Losh says:

    In my clients case he is on the hook for the dirt. He can make it the banks problem, but then he’s out of business. It’s a game of chicken.

    The TARP money, bail out is the same. Banks have said they will not lend unless the government gives them money.

    Hedge Funds, corporations, banks, bonds, securities, insurance all have money and continue to get money every day from poor saps who keep giving them money every day.

    In my clients case the bank can make a deal and make a profit. They are just constrained by policy and procedure.

    We could go back to the mass merger mania of the 1980s to find the problem, but the phrase used most often is that it’s like trying to get an ocean liner to turn. It takes time.

  34. 34
    shawn says:

    What I read said that many foreclosures are now due to the economy, people being out of work. I can imagine some folks bought a home pre-bubble at a normal price and a good 30 fixed loan, but with their lost job, they can’t keep up, and even with the price they paid pre-bubble, they cannot sell. I am just wondering what the number is of folks like this?

  35. 35
    AMS says:

    RE: The Tim @ 15

    I think it may be time for me to leave. I never have been able to figure out those threads. I simply type http://www.seattlebubble.com in my browser… This forum stuff really is getting too complicated for a simple blog.

    :-(

    (And I suppose, technically, this post is off-topic too. Sorry, I really haven’t figured that other area out, nor will I.)

  36. 36
    BanteringBear says:

    All this talk about Sterling Bank… I think they’re done. Sure, they received $125 million or so in TARP funds- but it doesn’t matter. Of ALL of the banks in the country, Sterling was rated the LEAST healthy in the most recent article I read. I cannot imagine how they’ll survive given all of the bubble projects they’ve funded, and the bad loans they’ve got on their books. I’d be surprised if they made it a few more months. I’m expecting the FDIC to shut them down any day.

  37. 37
    ElPolloLoco says:

    By Andy @ 27:

    Could you imagine taking a loan from a poorly educated puget sound banker with a beard…?

    Even worse, could you imagine giving them money as startup capital? My old man was approached by a gang of mangy-looking hippie-dropout types with glasses and beards and long hair and stuff back in ’79, but he told them to go pound sand. He told them the only thing he’d finance for them was a bus ticket back to Albuquerque. Not much gets past the old man, I’ve gotta say. I like to think I’ve inherited his sound business judgment.

  38. 38
    Mikal says:

    RE: ElPolloLoco @ 37 – That was the best story of the week.

  39. 39
    Mikal says:

    RE: AMS @ 35 – Tim puts up the start of an idea. We go from there. Who cares where it ends? I agree it is about 50 dorks an computers rambling.

  40. 40
    Mikal says:

    RE: S-crow @ 31 – Because the actual value of the land might make them insolvent.

  41. 41
    Mikal says:

    RE: Andy @ 27 – Move, you hate it here. I bet your wife makes you stay.

  42. 42
    Mikal says:

    RE: Andy @ 27 – You are to poor to own a house. That is a bummer. Nice how I read the thread from the botton up. You must be the fry supervisor to hope you can get a house at the prices you want.

  43. 43

    […] By request, here is a chart showing Notices of Trustee Sale and Unemployment. Note that the scale for each data set is different to allow their rates of change to be more easily compared. […]

  44. 44
    Andy says:

    Mikal,

    If the fry supervisors (earning $20K) living in 500K houses in this area warrant that….
    Pierce + King County is so overpriced; Pacific Northwesterners earn so little
    yet think there is something special about the Puget Sound
    The area is decayed and old, and full of filth – No wonder CNN lists this area as least affordable
    Gig Harbor is the ONLY nice area outside of Bellevue
    Yet we see University Place – the dump – (Waterfront circa 1970) homes selling for $1.2MM
    This area needs to drop at least 50%; no one can afford these homes
    Most people living in their shacks know they could never afford the current mortgage
    Homeowners need to let go, this market is heading back to 1990….just like the Stock Market…
    There is little difference…

  45. 45
    Kary L. Krismer says:

    By Andy @ 44:

    Yet we see University Place – the dump – (Waterfront circa 1970) homes selling for $1.2MM

    I guess there’s a lot we disagree on. I’d rather have a typical house built in the 70s than a typical house built this century.

  46. 46
    Mikal says:

    RE: Andy @ 44 – Do you hang out with homeless people? I know waiters that have made $70,000 a year. Granted we are in for some tough times. If you don’t like it here you should leave.

  47. 47
    what goes up must come down says:

    Mikal eventhough I completely disagree with Andy – let’s not get into the love it or leave it crap.

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