January Stats Preview: Mixed Messages Edition

Now that the last month of 2009 is behind us, let’s have a look at January’s stats preview. Most of the charts below are based on broad county-wide data that is available through a simple search of King County Records. If you have additional stats you’d like to see in the “preview,” drop a line in the comments and I’ll see what I can do.

Here’s your preview of January’s foreclosure and home sale stats:

First up, total home sales as measured by the number of “Warranty Deeds” filed with the county:

King County Warranty Deeds

This year’s drop in warranty deeds from December to January was nearly the same as last year’s: -37%. If single-family home sales follow a similar pattern (dropping roughly the same as a year ago), that would put January’s closed SFH at around 1,060, up 58% YOY. Since last January and February saw the lowest 1-month volume of sales since 2000 (as far back as our data goes), a 60% YOY gain certainly isn’t out of the question.

Next, here’s Notices of Trustee Sale, which are an indication of the number of homes currently in the foreclosure process:

King County Notices of Trustee Sale

January saw the first year-over-year drop in Notices of Trustee Sale in King County in nearly three years. That’s certainly notable. Unfortunately, foreclosures are still very elevated.

Here’s another measure of foreclosures, looking at Trustee Deeds, which is the type of document filed with the county when the bank actually repossesses a house through the trustee auction process. Note that there are other ways for the bank to repossess a house that result in different documents being filed, such as when a borrower “turns in the keys” and files a “Deed in Lieu of Foreclosure.”

King County Trustee Deeds

Actual completed foreclosures were up from last year, though the 36.5% year-over-year increase was smaller than any month in 2009.

Lastly, here’s an approximate guess at where the month-end inventory was, based on our sidebar inventory tracker (powered by Estately):

King County SFH Active Listings

Down 15% from last year, but still 26% above the 2000-2007 average for January. Is the pent-up supply contining to grow, or are inventory levels still elevated, keeping down prices?

Stay tuned later this month a for more detailed look at each of these metrics as the “official” data is released from various sources.

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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.


  1. 1

    I Imagine There’s Pent Up Unqualified Demand Too

    A joke:

    Bankers sometimes get bored commuting on the Light Rail to their jobs, so have learned to exercise in their seats. They strengthen needed neck muscles by continually nodding their heads side-ways “No”, preparing for home loan applicants.

  2. 2
    LA Relo says:

    Have you ever taken a look at “shadow inventory” for King County? Definitions vary, but if you’re not familiar with the term (though I am sure you are) CR includes:

    – Foreclosures in process
    – Unlisted REOs, or new construction
    – Homeowners waiting for a better market

    I’ve always wondered how widespread the toxic loans are in Seattle compared to Los Angeles. Probably easier to fog a mirror in this weather.

    I tend to think there are a lot of people under-water, who can’t refi but want to sell when things get better.

  3. 3

    RE: LA Relo @ 2

    You Got It

    Its like the duck sitting on her eggs, hoping they’ll hatch and grow. Trouble is, the longer the duck banks/sellers sit on this unsold mass of egg property, the higher the probility is the eggs will just rot and die.

  4. 4
    shawn says:

    RE: softwarengineer @ 3 – please add analogies to your study list (for extra credit tell me what is the software development analogy). The longer a duck sits on her eggs the higher the probability that the eggs will hatch. The duck knows when the egg has died and the duck moves on. Ducks do not cause thier eggs to go bad by sitting on them too long.

    In some cases it makes sense for a Bank to sit on a property, esp if they believe the value will rise from where it is now. Another good reason is they do not want to flood the market and drive down the value of the homes they are currently trying to sell.

    I am going to guess that right now it makes sense for the banks to sit on their properties. But I do see a tipping point where the projected gain from waiting is less then getting rid of them right now, when that happens we “might” see a flood of them on the market. But this is just a guess as I really don’t study this too much, I just read about it here for fun.

  5. 5
    corncob says:

    RE: shawn @ 4 – Banks are holding onto properties because they can mark them up on their books, and also there is a little bit of hope Uncle Sam will just buy them (for example, the 1.3T of Fed MBS purchases). Don’t be fooled into thinking the banks believe these homes will be worth significantly more in the future and thus they keep them. In a foreclosure there is a final settling of the value, if they just keep the home delinquent on payments they can make accounting assumptions that the “owner” might magically start paying them back again and therefore it has a higher value than a foreclosure. In a normal environment these banks would be punished by the market for holding this crap and having very high delinquency rates, along with the fact they are tying up capital that can be put to better use. Unfortunately, this is not a normal environment and banks are instead being rewarded by the government for this type of behavior, circumventing the market punishment.

  6. 6

    RE: corncob @ 5
    I agree with you, but how do you explain the homes that have been foreclosed on by the banks but not put on the market?

  7. 7
    Charles Miller says:

    By softwarengineer @ 3:

    RE: LA Relo @ 2

    Its like the duck sitting on her eggs, hoping they’ll hatch and grow. Trouble is, the longer the duck banks/sellers sit on this unsold mass of egg property, the higher the probility is the eggs will just rot and die.

    Exactly! Other than the fact that banks don’t lay houses and incubate them to keep them alive so that they can then hatch and become banks, I mean.

    By the way, have any of you considered subscribing to Sound Housing Quarterly? Apparently, it’s a lot like Seattle Bubble, but without the annoying pop-up ads.

  8. 8
    corncob says:

    RE: Ira Sacharoff @ 6 – Same thing, the actual price they can get is lower than the value they can carry it on their books for. How they decide, who knows. There are a lot of factors here at work, but I think that not taking more write downs is a big one. Really there is no pressure/incentive for them to act on anything right now, the government will give them all the free money they need. So I doubt they are investing a lot of money in getting the resources necessary to push stuff through, better to just trickle something out so you can have some stats to report when Congress hauls your CEO in for some theatre. Makes it easier to get Congress to bail you out with some sort of foreclosure avoidance free money, err I mean Helping Homeowners Keep Owning the Homes They Should Own Act. When continued government support looks more doubtful they will get serious about it. Perhaps the Fed stopping MBS (if they actually do it) and rates rising 50-100bps will be such a catalyst.

  9. 9
    The Tim says:

    By Charles Miller @ 7:

    By the way, have any of you considered subscribing to Sound Housing Quarterly? Apparently, it’s a lot like Seattle Bubble, but without the annoying pop-up ads.

    Har har. At least I set it up so the SHQ pop-up only comes up one time per computer, not every single time you go to the site.

  10. 10
    LA Relo says:

    I can see the motivation for the banks hoarding REOs, but at some point they are all going to have to hit the market. Unless of course the banks all decide to join Fannie and Freddie and become landlords.

    Problem is, they are actually making things worse and stalling a recovery. They’re prolonging the correction, and once it appears prices have stabilized they’ll flood the market with their listings and drive prices right back down again.

    Like a band-aid: rip it off quickly and be done with it.

  11. 11
    Brat says:

    I think closings will be down significantly in Feb for the over $400 market. Why? Because my home is on the market and showings dropped significantly in Jan. Most of the folks who have visited our home are from out of town, their purchase of any home is dependent on the sale of their current home. Many of these customers are from communities currently slammed by bad weather. My segment of the market is dependent on liquidity and it isn’t there yet.

  12. 12
    see it clearly says:

    RE: The Tim @ 9

    That isn’t how it is working for me … using FF 3.5.7 on Win 7 I’m getting the pop-up every time I switch pages (i.e. go to comments, get the pop-up, return to main page get the pop-up, etc …)

  13. 13
    see it clearly says:

    By see it clearly @ 12:

    RE: The Tim @ 9

    That isn’t how it is working for me … using FF 3.5.7 on Win 7 I’m getting the pop-up every time I switch pages (i.e. go to comments, get the pop-up, return to main page get the pop-up, etc …)

    Of course now it is no longer behaving this way ….. must have been a gremlin. please feel free to delete both these comments.

  14. 14
    The Tim says:

    RE: see it clearly @ 13 – Heh, no problem. There are a couple of things that may cause it to pop up multiple times. 1) You have denied cookies. 2) The WordPress caching function I have turned on may possibly cause the pop-up to appear more than once (though it shouldn’t be more than a handful of times) for someone who is not logged into an account.

    I did try to make it so it wouldn’t be super-annoying to people. I hate junk like that and don’t want to foist it on my readers. I just wanted to get a little more visibility for the project, since I work hard on it and feel that it is under-appreciated.

  15. 15
    shawn says:

    RE: corncob @ 5 – I agree with you completely. I do think there may be reasons beyond these also that are motivating banks to hold on to the properties. I am interested in what people here think they should do, in other words, if you were at the helm of bank X, what whould you do?

  16. 16
    Ray Pepper says:

    RE: shawn @ 15

    Shawn and everyone else wondering why these already foreclosed homes continue to sit……This is NOT some sort of grand mastered plan. The Banks are absolutely slammed and dealing with the REO, the Courts, bankruptcy’s, short sales, recent mergers, Hamp, Loan Modification, and staffing are causing tremendous delays in initiating Foreclosures and then moving them swiftly.

    Look for this to all speed up in late 2010.

  17. 17

    RE: Ray Pepper @ 16

    Its Akin to the Manure Hits the Fan Then?


  18. 18
    Joe Renter says:

    I have pop-ups every time I navigate on the site. I’m lazy and won’t mess with my computer. So, I guess I’ll say bye for now. Enjoyed the site.

  19. 19
    Snigliastic says:

    RE: The Tim @ 9 – Um, no.

  20. 20
    The Tim says:

    RE: Snigliastic @ 19 – Well that’s how it was supposed to work and I tested it on multiple computers across multiple browsers, logged in and not. Guess it’s not working the same for everyone, so for now I’ve disabled it.

  21. 21
    Ray Pepper says:



    “It would cost about $745 billion, slightly more than the size of the original 2008 bank bailout, to restore all underwater borrowers to the point where they were breaking even, according to First American.

    Using government money to do that would be seen as unfair by many taxpayers, Mr. Barr said. On the other hand, doing nothing about underwater mortgages could encourage more walk-aways, dealing another blow to a fragile economy.”

    Its coming…….Mortgage Cramdown (on a large scale is coming–not just from regionals anymore–the big boys will start cramming) it is the only answer!

    Watch and learn you naysayers! People will only be stupid for so long. When the masses realize its not coming back for a very long time it will become evident. 60 Minutes time to roll this story!

    Or simply….Just unyielding Short sales for a very long time.

  22. 22
    LA Relo says:

    There is a huge inherent moral hazard with cramdowns. As soon as you force a bank to write down the principal on a loan you ENCOURAGE people to stop paying.

    People are already encouraged to stop paying because the banks are so slow to foreclose, now you reward them for it?

    I still wouldn’t put it past our spend-happy government to consider it, and you can bet talk of cramdowns will increase.

    Eventually they will figure out they are encouraging people to stop paying and that’s it for cramdowns. The question is will they figure that out before or after they do it.

  23. 23
    AMS says:

    RE: LA Relo @ 22 – “There is a huge inherent moral hazard with cramdowns.”

    Is there a similar moral hazard to bankruptcy?

  24. 24
    Michael says:

    There’s a huge moral hazard in allowing banks to continue running on taxpayer money while pretending like they’re solvent and profitable. Cram-downs should cost the Treasury zero, but it’ll cost the banks that *decided* to issue the loans, and that profited from them, lots. Tough.

    As for what would I do if I owned a bank? If it were a welfare recipient banker, I’d have to tell the shareholders I’d run my bank into the ground, file bankruptcy, and take responsibility: something we’ll never see modern bankers do. If I were interested in getting into banking, however, I’d buy up the assets of the failed bankers for a fraction of their face value then renegotiate with borrowers on terms they could afford. I’d have plenty of space to do with because I’d have purchased the note for much less than face value. That’s how the market is supposed to work.

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