Foreclosures Spike Back Up in June, Nearly Matching Highs

Let’s expand on our preview of foreclosure activity with a more detailed look at June’s stats in King, Snohomish, and Pierce counties. First up, the Notice of Trustee Sale summary:

June 2009
King: 1,378 NTS, down 14.7% YOY
Snohomish: 746 NTS, down 8.7% YOY
Pierce: 811 NTS, down 22.8% YOY

Here’s your interactive Tableau dashboard updated with the latest foreclosure data:

The year-over-year numbers are somewhat misleading here, since as you can see, foreclosures saw an extreme spike in June of last year (thanks to WA SB 5810). Month-to-month, all three counties saw big surges, +26% in King and Snohomish and +10% in Pierce. King and Snohomish hit their highest points outside of last June, as Pierce fell just short of setting a similar record (March this year had 3 more notices than June this year).

The percentage of households in the chart above is determined using OFM population estimates and household sizes from the 2000 Census. King County came in at 1 NTS per 591 households, Snohomish County had 1 NTS per 361 households, and Pierce had 1 NTS for every 391 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for June of one foreclosure for every 133 housing units was 25th worst among the 50 states and the District of Columbia (down from 20th in May). Note that RealtyTrac’s definition of “in foreclosure” is much broader than what we are using, and includes Notice of Default, Lis Pendens, Notice of Trustee Sale, and Real Estate Owned.

Hit the jump for a larger version of the chart that shows the percentage of households in each county receiving a foreclosure notice each month:

Maybe we’re finally seeing that big second wave of foreclosures that I had been reading so much about. It will be interesting to see if this ramp-up continues throughout the second half of the year.

Whether or not we see a continued spike in the rate of foreclosures, there do not appear to be any factors in the underlying economic fundamentals (home prices, demand, unemployment) that suggest we will be seeing a significant decrease in the rate any time soon.

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, hit this chart and drag the date slider to its full range. 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.

28 comments:

  1. 1
    Sniglet says:

    I’ve said it before, but it bears repeating that it would be marvelous to see analyses on mortgage delinquencies. It would be fascinating to see the trends, on a per-county basis, of defaults. Tracking defaults might give us a much better picture of what is happening in the market than actual foreclosures. We know that banks are recluctant to foresclose in at least some cases. Moreover, delinquencies always occur long beore any foreclosure notice is filed, which would tend to provide a critical early alert to what was going to be happening with foreclosures down the road.

  2. 2

    Unfortunately, It’s As I Predicted in Early 2009

    Albeit, some SB bloggers corrected me, RE: the 99 week unemployment extentions impact that some got, vs. just a regular 26 week compensation period that all at least got. They were correct and so was I.

    Now, even the 99 week extentions are drying up and that means the ability to make mortgage payments is too. Two incomes are not exempt from mortgage defaults too, but in better shape than one income households with a wage earner chronically unemployed.

    I suppose delaying the inevitable sounds good to short-term planners, but in the end, the same foreclosures are hitting the fan as they would have before the unemployment extentions and now with less federal ability to borrow even more to delay the inevitable and make it even worse later.

    A lower unemployment rate with concurrent “no necessary job creation” for America’s masses of current insourced population growth is bad news, not good. The numbers look better, but the uncounted ghost unemployed Army just keeps chronically growing in millions per year.

  3. 3

    We’re the median state! ;-)

  4. 4
    ray pepper says:

    I know, I know…………… but I like to say it………………….They are all coming back…Not a matter of if……………………..just when……………………………….

    The decade of absolute unrelenting short sales and foreclosures because people will only remain stupid for so long………….They don’t have the cash to cover now (plus the 10% to sell) nor will they in 5 years and the banks will be taking it on the chin for a very longtime.

  5. 5
    Anon. says:

    RE: ray pepper @ 4

    On the chin?
    I think that the euphemism isn’t strong enough to imply what will *really* happen. ;)

  6. 6

    Washington State Unemployment Rate Drops to 8.9% per Seattle Times Today

    That’s the bad news, folks are losing their unemployment benefits (incomes).

    The concurrent job loss for Wash St per BLS is -28,000 YOY through May 2010; albeit this is too rosy [it includes the added Census Workers that were later all butcher axed in June 2010]. See Appendix E:

    http://www.bls.gov/news.release/pdf/laus.pdf

  7. 7

    There is a silver lining to everything. I’m sure a lot of the neighbors of these properties are glad to get new owners into them, and are hoping that the new owners are better suited to being able to maintain a home. I’ve seen a number of run down neighborhoods starting to improve–at least temporarily.

  8. 8
    Scotsman says:

    Seattle proper is one thing, the suburbs/country another. Nice homes on my street, a dead end country-type road in the Preston/Fall City area are now down to $150/sqft and STILL not selling. Asking prices now in the $400-650K range, down from $1MM. No one is even looking at them. We have a ways to go before a bottom is in sight. Will what has started here eventually find its way into the city, or will there always be a buyer for that Capitol Hill charmer and Ballard box?

  9. 9
    LA Relo says:

    Rising unemployment will only be half the the story in the near future of foreclosures.

    We touched on the morale issue in the post about walking away from a mortgage, but not so much the effect of it.

    Unemployment and falling prices are creating a vicious cycle of foreclosure on their own. The coming source of defaults I think will be the alphabet soup of modification, principal reduction and loan restructuring programs.

    Even if prices and incomes were rising those are enough incentive for people to stop paying a mortgage even if they can afford it.

  10. 10
    RoflCatDown says:

    So, my question is… What creative accounting format have banks invented that will allow them to take affected assets (foreclosed properties) and write them off without having to withhold additional cash reserves?

  11. 11
    ARDELL says:

    RE: Scotsman @ 8

    I have an interesting “case” going on in Carnation where the buyer (bought 9 months ago) is trying to shift from an FHA minimum down to a 20% down conventional with no PMI, without putting any additional down payment into it. Purely based on a refinance appraisal. He bought it as a short sale at 88% of the then value with only 3.5% FHA minimum down. If the new appraisal moves the “equity” to 20%, he can lower his rate and remove the private mortgage insurance. It will be close. He did make some improvements since time of purchase.

    At present “the comps” have fewer bank-owned and short sale closings than when he purchased, so the appraisal should come in higher.

    Many who purchased in semi-rural to rural areas (as you are mentioning) in the last 18 months, bought at prices substantially below the then current value and still lower than today’s current value. The rate on the refi is locked in at 4.375%. If he can also get rid of the PMI without putting more down, this “rural” purchase should be a good long term hold.

    Some of the $1.5M plus homes around him did sell recently, so it’s a good time to try to kick out the PMI on a refinance.

  12. 12
    Blurtman says:

    RE is local. When Microsoft lays off, we are all in trouble, but I don’t see that hapenning.
    That hissing sound is the bubble deflating.

  13. 13
    RoflCatDown says:

    RE: Blurtman @ 12 – Microsoft laid off some 5000 people early last year. They also shuttered most of their game divisions in the process.

    And mind you that was just layoffs. Nobody has any idea of how many positions were lost by simply instituting a hiring freeze and letting natural attrition cut their ranks for them by making the working environment suck a little more each month… (This is typically cheaper than layoffs and saves you from having to make headlines in newspapers.)

  14. 14

    RE: RoflCatDown @ 13 – Actually, I’m not sure anyone has any idea of what’s going on at MSFT. I’ve asked a few times what their total employment levels are locally, including contractors. I wouldn’t be surprised to learn that the number has increased in the past year.

  15. 15
    patient says:

    RE: Blurtman @ 12 – I would think Boeing is a much bigger factor than MS counting direct employees, sub-contractors other and other local suppliers?

  16. 16
    RoflCatDown says:

    RE: Kary L. Krismer @ 14 – I know people who have come in as contractors, I know they’re hiring in a few areas for FTEs. I know one person who came in as a contractor and was laid off the same week due to lack of work. I get a lot of varying tales.

    Most companies I know of are still in some sort of hiring freeze and only hiring/replacing absolutely essential people at this time. When the market gets better I expect to see a huge level of turnover as people swap jobs looking for “grass is greener” kind of things after feeling pinched at their current employers.

  17. 17
    The Tim says:

    By Kary L. Krismer @ 14:

    I’ve asked a few times what their total employment levels are locally, including contractors. I wouldn’t be surprised to learn that the number has increased in the past year.

    Well I don’t know about the number including contractors, but the FTE numbers are here.

    By patient @ 15:

    I would think Boeing is a much bigger factor than MS counting direct employees, sub-contractors other and other local suppliers?

    That’s the argument I’ve made for some time.

  18. 18

    RE: The Tim @ 17 – That link also has current (updated April 2010) figures for Washington state at 39,738, but not historical like the FYE numbers.

  19. 19
    David Losh says:

    RE: The Tim @ 17

    Actually, how many people does the Melinda and Bill Gates foundation employee? How about Vulcan?

  20. 20
    The Tim says:

    RE: Kary L. Krismer @ 18 – Well, according to TechFlash they had 40,210 in WA as of July last year.

  21. 21
    deejayoh says:

    Tim –
    Looks like you can also view the “Discontinuation of Trustee Sale” filings. There were 342 in the same time period. I wonder how that “cure rate” has changed over time.

    Thats about 25% in June

  22. 22
    Blurtman says:

    RE: patient @ 15
    Yeah, but I am looking more locally, living in Sammamish. I think Microsoft is a bigger factor here. Maybe Costco, too.

  23. 23
    Ross Jordan says:

    By The Tim @ 17:

    By Kary L. Krismer @ 14:

    I’ve asked a few times what their total employment levels are locally, including contractors. I wouldn’t be surprised to learn that the number has increased in the past year.

    Well I don’t know about the number including contractors, but the FTE numbers are here.

    Note, that is worldwide FTE headcount; not local headcount. I think the trends are similar direction; but it is possible for WW headcount to be going up while local headcount goes down.

  24. 24
    Cheap South says:

    RE: The Tim @ 20 – So the net loss at MSFT has been about 400 people since last July.

    @Blurtman – do we know how many non-warehouse (headquarters) people does Costco employ? I did not hear of Costco lay-offs (ever).

  25. 25

    By The Tim @ 20:

    RE: Kary L. Krismer @ 18 – Well, according to TechFlash they had 40,210 in WA as of July last year.

    Okay, so that’s a reduction of about 500 in just under a year. Isn’t that much less than what they claimed to be laying off locally?

    The reason I bring this up is that MSFT still makes a lot of money and doesn’t really need to lay people off. They probably have people they want to lay off, and divisions they want to cut. But when it comes to them actually making significant net cuts I just see that as being all that likely because they can essentially pay for whatever they want.

  26. 26

    By deejayoh @ 21:

    Tim –
    Looks like you can also view the “Discontinuation of Trustee Sale” filings. There were 342 in the same time period. I wonder how that “cure rate” has changed over time.

    Thats about 25% in June

    The thing is those filings are really hit and miss. They don’t always get filed.

  27. 27
    Blurtman says:

    RE: Cheap South @ 24
    Cheap South,
    I don’t hear about Costco layoffs. There is also a decent sized Siemens complex nearby, not sure how many they employ. And Swedish is building up, too.
    Several of my neighbors work at MSFT. The house right next door sold in 10 days a few months back. I live in Sammamish so I think the local economy and perhaps therefore the local market is good, in spite of national trends. which seem to be biased by the extremes of the bursting bubble in CA, AZ, NV, FL.

  28. 28

    […] Repossession Rates Both RisingBy The Tim on July 22, 2010 | Leave a responseA few days ago on our June foreclosure update post, deejayoh pondered an interesting question:Looks like you can also view the “Discontinuation […]

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