Foreclosures Yet Again Shot to New Record Highs in March

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

March 2009
King: 1,089 NTS, up 129% YOY
Snohomish: 499 NTS, up 125% YOY
Pierce: 705 NTS, up 51% YOY

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

Notices of Trustee Sale

Note that we are tracking notices of trustee’s sale, which does not indicate the completion of actual foreclosures, but is rather a measure of the number of homes that have reached a certain point in the foreclosure process. See the bottom of this post for more details.

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 719 households, Snohomish County had 1 NTS per 525 households, and Pierce had 1 NTS for every 420 households. March set new all-time highs for all three counties.

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate of one foreclosure for every 1,483 households was 18th worst among the 50 states and the District of Columbia, and only slightly better than the national average of 1,003. Theoretically this page will be updated later today with RealtyTrac’s county-by-county data for Washington.

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

Notices of Trustee Sale - King

Homes in foreclosures shot back up to new highs in King County in March, coinciding with a new record in YOY median price drops.

Notices of Trustee Sale - Snohomish

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

Notices of Trustee Sale - Pierce

Pierce County again saw the smallest year-over-year increase in foreclosures, but still reached a new high in March.

Lastly, here’s an update of the longer-term chart for King County foreclosures, going back through 1979, to provide some perspective to the latest data:

Notices of Trustee Sale - King

Wowzers.

Coverage elsewhere:
Seattle P-I: Seattle-area foreclosure rate closing in on nation’s
KING 5 News: More Seattle homeowners falling into foreclosure

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.

0.00 avg. rating (0% score) - 0 votes

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.

46 comments:

  1. 1
    Greg Perry says:

    This would also mean that there is a much higher percentage of foreclosures in the active lisitng count. Inventory counts are down over 15% in both Pierce and Snohomish from last year. KC is levels are about even with last year.

    I read in the Wall Street Journal yesterday that the banks will be more aggressive now foreclosing on their properties, as well.

    Looks like buyers will have some bargains. Foreclosed properties are sure a lot easier to close than short sales!

  2. 2
    bob says:

    WOW!

    “The misadventure in Snoqualmie helps explain why the largest U.S. lumber producer is in a financial crisis so deep it turns down the heat in its offices to save money and is contemplating upending its corporate structure after 109 years to become a real estate investment trust.

    Other U.S. timberlands managers have converted to REITs to slash corporate taxes. The move would reward Weyerhaeuser shareholders, who hold their annual meeting today at the headquarters in Federal Way, Washington, by returning most profits to them as dividends. At the same time, it may force the spinoff of more non-timber assets

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aUlq.mBMg5To&refer=home

  3. 3
    Acerun says:

    How are “responsible” owners going to be able to compete on prices with the glut of foreclosures?

    I moved here two years ago from the Midwest. I was lucky to sell our place for 8% less than I purchased it for.
    The people we sold to have listed it again for 10% less than they purchased it for. I looked on realtor.com and there is a house 2 doors down, same floor plan that is half the price that our old place listed for. There are also larger homes in the same development for less than it listed for.

    I can’t see any reason that this will not happen in the suburban areas and condo markets of Seattle.

  4. 4
    truthtold says:

    greg parry is so annoying…give the boy a drum.

  5. 5
    Kary L. Krismer says:

    Tim, you used to show households per foreclosure, which back in October was showing a downward trend.

    https://seattlebubble.com/blog/2008/11/13/foreclosures-continued-to-increase-in-october/

    But the percentage of households in foreclosure above, shows an upward trend for the same time period.

    What am I missing?

  6. 6
    Kary L. Krismer says:

    RE: truthtold @ 4 – Do you have a problem with something he said?

    His point about active listing properties in foreclosure is a good one. Prior to the amendments to the distressed property law only buyers who had high risk tolerances (or high levels of ignorance) would make bids on foreclosure properties–at least without the out of a Form 22-NFW. That was bad for both buyers and sellers, the latter of which would have welcomed a chance to negotiate, even though they would be doing so at a disadvantage.

  7. 7
    The Tim says:

    By Kary L. Krismer @ 5:

    What am I missing?

    Um, the fact that a downward trend in # of households per foreclosure is equivalent to an upward trend in the percentage of households in foreclosure?

    Example:
    If 1 out of every 100 households are in foreclosure, that’s 1%.
    If 1 out of every 50 households are in foreclosure, that’s 2%.

    Decreasing # of households per foreclosure, increasing percentage.

    Looking at a chart of the number of households per foreclosure is somewhat counter-intuitive (obviously), which was pointed out to me in the comments on previous posts, and is the reason I switched to only posting the % graph.

  8. 8
    DrShort says:

    According to DataQuick, 21% of February sales in this area were foreclosures:

    http://www.dqnews.com/Articles/2009/News/Seattle/RRKIWA090407.aspx

  9. 9
    AZ says:

    With unemployment still climbing at a rapid pace and the exotic mortgages starting to reset I expect the future numbers will be worse not better.

  10. 10
    JJL says:

    Snohomish County:

    Active Listings:
    24% are Short Sales and 10% are REO’s.

    Sold Listings:
    15% are Short Sales and 27% are REO’s.

    Tim, I still disagree with the way you present the foreclosure stats. Even though Notices have been rising (however I believe April will show a drop), actual foreclosure rates are not rising.

    Through March 15th only 80 Trustee Deeds were filed.

    I understand that the charts show how many people are in trouble, but there is another story going on and that is, “why are so few of them are turning into actual foreclosures”? That’s the question I would like answered.

  11. 11
    Kary L. Krismer says:

    RE: The Tim @ 7 – See, that’s why I never did anything with my accounting degree. ;-)

  12. 12
    Kary L. Krismer says:

    RE: DrShort @ 8 – I’d guess most of that was simply due to the very low level of voluntary sales rather than increasing foreclosures. January and February were very low volume months for the NWMLS.

  13. 13
    deejayoh says:

    By JJL @ 10:

    Snohomish County:

    Tim, I still disagree with the way you present the foreclosure stats. Even though Notices have been rising (however I believe April will show a drop), actual foreclosure rates are not rising.

    Through March 15th only 80 Trustee Deeds were filed.

    I understand that the charts show how many people are in trouble, but there is another story going on and that is, “why are so few of them are turning into actual foreclosures”? That’s the question I would like answered.

    JJL –
    I think your March stat is the one that is not representative. NOTS–>foreclosure takes 90 days – so the appropriate comparison for your half of March stat for foreclosures is half of December NOTS.

    If you go back to this post, you will see that December NOTS was 660, so basically 80 foreclosures in half of March compares to 330 NOTS. That is a ~25% conversion rate.

    Now in March NOTS are 65% higher – plus you had a “foreclosure holiday” in Dec/Jan/Feb – so I expect foreclosures will be much higher in June.

  14. 14
    Slumlord says:

    This is anecdote may not be relevant to here because it has to do with San Diego. I recently learned that an acquaintance in SD had his condo legally reposed by the bank in September, however he is still living in it, mortgage payment-free, as a squatter. All he is paying for is the utilities to keep the lights on and the cable going. Apparently, there are so many foreclosed properties that the banks are way behind on evicting people. I wonder what the record is for living payment-free.

  15. 15
    Kary L. Krismer says:

    RE: Slumlord @ 14 – I’ve heard of short sellers going almost a year without payments, while the bank sat on offers for over 3 months.

  16. 16
    Greg Perry says:

    From WSJ:

    Some of the nation’s largest mortgage companies are stepping up foreclosures on delinquent homeowners. That will likely lead to more Americans losing their homes just as the Obama administration’s housing-rescue plan gets into gear.

    http://online.wsj.com/article/SB123975395670518941.html

  17. 17
    David McManus says:

    By Greg Perry @ 16:

    From WSJ:

    Some of the nation’s largest mortgage companies are stepping up foreclosures on delinquent homeowners. That will likely lead to more Americans losing their homes just as the Obama administration’s housing-rescue plan gets into gear.

    http://online.wsj.com/article/SB123975395670518941.html

    So people didn’t pay the note and the bank takes THEIR house back. Is this supposed to cause outrage? Sounds fair to me.

  18. 18

    LET’S TOSS A BONE TO THE NORMAL LISTED HOMES

    Yes, the foreclosures are horrifyingly spiking and clearly making normal listings look way overpriced too. But, just as the normal listed homes generally need costly window dressing remodeling [like landscaping, new roofs, kitchen/bathroom upgrades, etc.] to catch the few qualified buyers out there; the fixer uppers [most likely most of the foreclosed units] don’t have the window dressing [or the seller costs either] upgrades.

    If I was a seller of a normal listed home, I’d simply sell it cheap as a fixer upper….most of the scarce buyers out there would much rather pick out their own floors and colors, etc. anyway, and most buyers [in my opinion] wouldn’t mind splitting the difference of the cancelled theoretical window dressing costs to make the house perfect just to get 20% off, instead of like 30% off the old perfect unit price selling as a fixer upper [like foreclosed homes].

    Another problem with foreclosed homes or even normal listed homes with low income wage earner sellers; they’re cheap with the thermostat in the winter time [or don’t even heat the place at all for months/years]. This likely creates mildew in the sheet rock and the house will stink. The remedy is replace the sheet rock, or better yet, light a match to the house. I like sweet smelling NW homes sold by older/wealthier sellers, where they like the whole place 70-72 degrees year around and aren’t greedy with the heat at night or weekdays. Another problem with empty foreclosed homes…..rats….LOL

    Ask most realitors, they’d agree with me.

  19. 19
    The Tim says:

    RE: David McManus @ 17 – Is there supposed to be outrage? My reaction was the same as yours. I just wish it worked the same way on the corporate scale. Banks that placed bad bets go out of business instead of being rewarded with oodles of taxpayer dollars (from the future).

  20. 20
    b says:

    Next month’s numbers should be really bad. During the first few months, Citi, BoA, Fannie/Freddie, JPM, etc were all under the foreclosure moratorium. That was lifted at the end of the month so activity will be ramping up quickly.

  21. 21
    Greg Perry says:

    RE: David McManus @ 17
    Sounds fair to me, too. The faster the foreclosures flush through the market the better as far as I’m concerned. As I said, a good time for buyers and investor buyers to pick up good properties on sale.

  22. 22
    murrolems says:

    Can someone point me to a good resource to view Seattle foreclosure listings? I’m an avid redfin.com user, however, I don’t feel like redfin gives a good picture of foreclosure listings.

    We’re hoping to buy in the second half of this year and are interested in seeing what potential deals are out there.

    TIA

  23. 23
    Greg Perry says:

    RE: murrolems @ 22
    If they have been listed, they will appear on all the local RE sites. Redfin, JLS, Windermere.

    Just this week, the NWMLS created a new field to check for short sales and foreclosures so they will be easier to spot AND we’ll be able to run better stats. As we move forward, we should be able to identify them easier.

  24. 24
    Colin says:

    Jim the Realtor has also discussed the issue raised in 14 and 15 e.g. http://www.bubbleinfo.com/2009/04/2009-the-year-of-free-rent/

    But this also further pushes down the price of the foreclosed house, if you have to figure that buying will be a huge and prolonged hassle.

  25. 25
    Kary L. Krismer says:

    RE: murrolems @ 22 – Do you mean bank owned? Information on that should get better after the first of the month when the new NWMLS regs come out. For actual foreclosures there is no good site I’m aware of, other than looking at the King County Recorder’s site and then trying to track them from there using other sites.

    Edit: What Greg said in 23. ;-)

  26. 26
    Scotsman says:

    RE: Greg Perry @ 21

    Go for it, Greg! I suggest you leverage up as much as possible on “good buys” and low interest loans. Get your friends, family, and relatives involved in funding pools to purchase as many properties as you can. This is truly a once in a lifetime opportunity. The key word here is: “Gems.”

  27. 27
    98115_Renter says:

    RE: murrolems @ 22

    I thought that’s what RealtyTrac was for.

    http://www.realtytrac.com/

  28. 28
    silver9 says:

    RE: Slumlord @ 14

    Just curious. Is this person proud of being a squatter or ashamed?

    Going from my grandparents who paid for everything in cash to now, our culture seems to have lost the social stigma of making bad financial decisions. Our moral compass is really changing.

  29. 29
    b says:

    silver9 –

    I think the stigma is still there, but those “punished” by it get enough reward anyways to make it worth it. I wouldn’t mind so much having the stigma of being someone who lost their house to a big financial mistake if the reward was that I got to spend a bunch of money I didn’t have from equity extraction and then got a free house to live in for 2 years while Countrywide figured out when to evict me. The equation is skewed now such that socially its looked down upon, but otherwise its heavily rewarded. Its like being a slimebag salesman, sure people look down on what you do but if you make enough money at it, who cares?

  30. 30
    Kary L. Krismer says:

    Part of it is that often the prior owner staying is viewed by the bank as a positive, as long as they’re taking care of the place and will leave when the time comes.

  31. 31
    Ray Pepper says:

    This is absolutely NOTHING yet. Remember ……….. People are NOT stupid and they will continue to walk in record numbers. Americans WILL NOT hold onto their upside down assets. Bringing rates to even 0% will be like a bandaid on an arterial wound. Short sales will be rampant because sellers will NOT bring funds to close.

    Its all coming back. Not a question of IF….Just when… Home sellers MUST get very aggressive this Spring and Summer to SELL. With ever depreciating values and increasing property taxes the “mantra” of homeownership has been severely harmed.

    Take your time BUYERS and focus on the foreclosures and short sales. There will be many GEMS to be purchased.

    When Tim started this blog he used to state…..”Since when is buying something cheaper a bad thing?” His question will be answered over the next decade.

  32. 32
    Hector says:

    Agree Ray. I have an otherwise very responsible friend who feels underwater on the brand new home he bought two years ago. Stop me if I’ve posted this already, but I’m still in shock. His mortgage is around $2600 per month, is underwater compared to neighborhood comp’s (what few there are), and the average rent in his area for a home his size is around $1700.

    He, as I am sure many others have, has talked himself into believing it’s ok to walk away, it will not look as bad in 3 years or so because “everyone” will have one on their credit, and that the clause allowing him to walk would not exist in the loan if the bank wasn’t prepared for it.

    He’s breaking even on bills, nothing late, but doesn’t exactly love his house anymore, and feels like he would be better served just walking and taking an extra $900 home a month by renting, and then in 3 to 7 years starting over again with a huge downpayment from that $900 a month savings.

    It’s going to get worse before it gets better. We can’t blame the foreclosures or the short sales, they are only a symptom of the overall condition, that being Americans stretched and stretched and stretched, and we are now experiencing the backlash.

  33. 33
    David Losh says:

    RE: Greg Perry @ 1

    Foreclosures sell to people who are paying too much. The banks are holding out for 80% of loan value, they will go as low as 60%, but the numbers for foreclosure and short sales are about the same. Barring loan value there is fair market value that banks will consider taking a discount on.

    The bottom line is that for every REO, foreclosure, or short sale the Real Estate market goes down in price. The value is what properties will rent for. Rents are going down. Then we will be throwing in commercial loans in 2011, 2012, because there are usually five to seven year balloons on commercial loans.

    Rents will continue to go down, value will go down, and the price of assets will go down. There are no deals, gems, or bargains. You would have to be an idiot to take on mortgage debt today.

    The only recourse that any one, bank, or individual, has is to pay down principle balances. Loan modifications should be all loans outstanding today, if the borrower choses, be 30 year fixed, 6% interest, and fully assumable.

    This would take a huge selection of home out of the market place, like rent control, banks would be more solvent, prices could stabilize, and lending could continue.

  34. 34
    voight-kampff says:

    RE: David Losh @ 33

    since you say people would have to be idiots to take on a mortgage, have you stopped selling realestate?
    do you say this to your clients?
    dont you have listings?
    I am not be rhetorical, I am just curious.

  35. 35
    David Losh says:

    RE: voight-kampff @ 34

    Some buyers do buy properties with the idea they will pay down the principle balance in order to have an asset. Leveraging has been gone since 2006, in my opinion.

    This year people who want to buy should be buying what they want to keep. There are some properties that are worth paying off.

    We are in an exceptional time. Steps could be taken to stabilize the housing sector, but throwing money at banking is a misstep. Banks should have been allowed to fail. They made the mess and they should have cleaned it up, which they easily could have. Banks make money. Banks are showing profits.

    The idea that we have to have debt in order to have an economy is wrong. Debt, and debt instruments in particular, got out of control. Congress should be reigning in banking, and lending with regulations to protect the consumer.

    So yes, I really do talk this way. Yes, I am a bad Real Estate agent. Yes, Real Estate has rules that are constant.

  36. 36
    Slumlord says:

    RE: silver9 @ 28

    That is a good question. I would guess that it is a combination of both pride for screwing the banks and shame for getting into such a financial mess. I don’t know him very well as he happens to be my girlfriend’s ex, so it is not very likely that I will ever know the full story.

    Your point on the changing moral compass is a good one. My grandparents were also much more conservative with their money. I think the compass is changing again, but it is hard to tell where it is leading. For instance, I have several friends where we used to get together on a weekly basis to talking about real estate. I stopped buying property in 2004 and was sort of the oddball in the group because I became concerned about falling prices. My friends humored me and told me that I was missing the equity gains. These days, I am lucky to see them at larger social gatherings, and we never go out for drinks anymore. Maybe that does not reflect on society, but maybe it does.

  37. 37

    No, David, it’s not that you’re a bad real estate agent, it’s that you don’t buy into the real estate/mortgage industry mantra that “the more you borrow the more money you’ll make”.
    The theory behind that is that real estate only goes up, and that borrowing unlimited amounts of money is riskless.

    But I’m with you on this. Debt is a big albatross, something that feeds onto itself and once it gets started has a tendency to grow out of control.

  38. 38
    Lurker says:

    I was under the impression that if somebody walked away from their mortgage, the bank would seize the house, get it sold and whatever the $$ loss would happen to be, the person that walked away was responsible for paying that back to the bank.

    Is this not true?

  39. 39
    kfhoz says:

    RE: Lurker @ 38 – Yeah, that is what I thought also until I learned about non-recourse loans.

    Not only that, but the debtors no longer even have to pay taxes on the forgiven loan amount.

  40. 40
    David Losh says:

    RE: kfhoz @ 39

    While property was going up in value banks and investors lobbied to get foreclosure to be a quick process. It used to be that if you owned the home it was a judicial process to get you out. It cost the banks time and money. The courts could then try to get the borrower to pay the debt, but bankruptcy would erase that.

    Banks also make consumer loans that bankruptcy wipes out. So it was a catch 22 for the banks to have that mechanism in place that would cost them time, legal fees, and months of wrangling. The foreclosure clause of non recourse clears the banks books quicker. Many times people will allow the foreclosure while paying consumer debt to avoid the bankruptcy.

    The banks also are the ones who wanted changes in bankruptcy laws. Today those changes are actually forcing more foreclosures. It’s a long complicated mess that banks wanted in place.

  41. 41
    Sleepy says:

    Just wondering……………………all these people losing homes, some just walking away………………where are they all living?

  42. 42
    Jonness says:

    RE: Sleepy @ 41

    Historically speaking, buying a home was often cheaper than renting a similar home. Then the housing bubble came along and caused prices to go so high that it cost about 2x more to buy a home than rent it (around here anyways). In fact, last month, I strongly considered renting a place on the water for $900/mo. that’s tax assessed at $458,000.00. Thus it would cost me perhaps 3x as much per month to buy the place than rent it.

    So for those who bought their homes near the peak of the bubble, mailing the keys back to the bank saves them a ton of money and allows them to live within their means again. First, they get a bunch of free rent when they stop making payments, and after the bank takes possession, they get to rent a similar place for much cheaper than their mortgage payment. This is especially true if they put 0% down when they bought the house or took out equity in the home.

    Certainly, there are families who’ve lost jobs and will have to move in with friends or family. And I imagine some people are being forced into homelessness. Thus, for some, mailing the keys back to the bank is a really good deal. For others, it represents a massive loss of lifestyle. However, I suspect for pretty much all who lose their home, the pressure, stress, and uncertainty they must endure during the new transition period is off the charts. Fortunately for many, once all is said and done, they are better off.

  43. 43
    Lurker says:

    RE: David Losh @ 40

    Was it standard practice then for loans made to home buyers in the past five years to be non-recourse loans? Is it the same today? And to clarify, if someone was to walk away from their house they would need to declare bankruptcy in order not to be in debt to the bank?

    I’m thankfully not in the situation myself but know a few people that are upside down and can hardly afford their monthly payments. I’m wondering why they are hanging onto a place that, now or even in the medium future, isn’t worth what they owe. Thanks.

  44. 44

    […] 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 the final chart in this post. […]

  45. 45

    […] 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 the final chart in this post. […]

  46. 46

    […] and Pierce County records. For a longer-term picture of King County foreclosures back to 1979, refer to the final chart in this post. For the full legal definition of what a Notice of Trustee Sale is and how it fits into the […]

Leave a Reply

Use your email address to sign up with Gravatar for a custom avatar.
Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Please read the rules before posting a comment.