Foreclosures Still Climbing, Pace May Be Easing

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

October 2010
King: 1,307 NTS, up 96% YOY
Snohomish: 710 NTS, up 120% YOY
Pierce: 802 NTS, up 108% YOY

Note that until we get to next March, our year-over-year comparisons are going to be extremely high due to the lull that we saw last year after the new state foreclosure laws went into effect.

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

Same basic story we’ve been telling for the last two years. Month-to-month zig-zags, but an overall steady climb upward. It’s difficult to tell due to the distortion in 2009’s data, but the rate of increase may be tapering off somewhat.

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 625 households, Snohomish County had 1 NTS per 381 households, and Pierce had 1 NTS for every 396 households (higher is better).

According to foreclosure tracking company RealtyTrac, Washington’s statewide foreclosure rate for October of one foreclosure for every 440 housing units was 14th hightest among the 50 states and the District of Columbia (same as July, August, and September). 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:

All three counties are still slightly below their June and July highs, but up notably from August.

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.

60 comments:

  1. 1
    ray pepper says:

    Pace maybe easing? Thats a funny one. 868 scheduled for Trustee Sale tomorrow in just King and Pierce. Most will likely be postponed. Then many more will be taken back by the banks. The usual 25 will sell to Investors. I would like to point out many of the 868 are from prior weeks postponements and their day of reckoning has arrived or will be shoved down the line further.

    No slow down until they all come back. One way or another they all will be coming back!

  2. 2
    The Tim says:

    RE: ray pepper @ 1 – Ray I didn’t say that there are fewer foreclosures. I’m just saying that the rate of increase might be slowing slightly. Again though, it’s hard to tell since they tend to vary so much month to month, and the year-over-year comparisons are shot until next spring.

  3. 3

    Ray, continuances of foreclosure sales are nothing new.

    Tim, I think it may be later than next March before we get decent YOY comparisons, due to the recent moratoriums of some companies. That effect doesn’t seem to be anywhere near as extreme as that caused by the prior legislation, but there has to be some effect.

  4. 4
    NumberMonkey says:

    What do you mean by “decent” YoY comparisons? Who cares what the “true” rate would have been if not for the interventions. The effects on the housing market are going to come from the increased supply, which is only affected by the houses that actually do come on the market through foreclosure.

  5. 5

    RE: NumberMonkey @ 4 – I wouldn’t necessarily call either the legislation or the voluntary moratoriums interventions. But as a practical matter you can never exclude every outside impact (e.g. government programs to encourage modifications), but the legislation was huge. We don’t know at this point the impact of the moratoriums, or even if the impact is positive or negative (more or less foreclosures).

  6. 6
    softwarengineer says:

    The Good and Bad Conundrum with Foreclosures

    If you’re a home owner, you want them mitigated, if you’re a home buyer, more foreclosures usually mean lower home prices.

    The bottom line: I don’t think either group supports defaulting of your payment contract and walking away without serious problems.

    Stimulus II will help keep mortgage interest rates down, but can kill the dollar’s value and hike up food/energy prices…..at some point we need to start paying savers a just/safe interest rate too. There’s always two sides to most issues.

  7. 7
    NumberMonkey says:

    RE: softwarengineer @ 6
    As a potential buyer and rational actor I fully support defaulting.

  8. 8
    LA Relo says:

    The pace of reported or filed foreclosure proceedings may be easing, but I guarantee you the number of people who stop paying their mortgage and fall behind on payments is rising more than ever.

    Why pay? The gov’t has given every incentive not to, and banks have every incentive to turn a blind eye.

    As a bank, why process foreclosure paperwork if it’s now going to be scrutinized for fraud? Easier just to go and borrow more money at 0% from the Fed and lend it out at 24% to people on credit cards.

  9. 9
    Jules Seaman says:

    I like reading your blog, it’s good to know what’s going on south of the border. Up here, the Vancouver real estate market appears to be balancing out at last.

  10. 10
    ray pepper says:

    RE: LA Relo @ 8

    ” I guarantee you the number of people who stop paying their mortgage and fall behind on payments is rising more than ever.”

    Agree 100%

  11. 11

    […] dollar” for your home? Another use of this information is if you are reading the news that foreclosures and short sales are driving prices down…BUT all the homes you mark as “of interest” and put into […]

  12. 12
    Jillayne says:

    “I guarantee you the number of people who stop paying their mortgage and fall behind on payments is rising more than ever.”

    I agree with Ray and LA Relo.

  13. 13
    Scotsman says:

    RE: Jillayne @ 11

    The new “silent majority?”

  14. 14
    Jillayne says:

    Scotsman I’ve received more questions, calls and emails in the past 3 months about ‘walking away’ than all of 2010 combined. Primary residence, rentals, second homes…People who can make their payments but just don’t want to anymore for many reasons….I think 2011 is going to get interesting.

    Here are a few examples:
    1. Homeowner has a rental and he’s upside down on the monthly payment by $750/month. He’s been managing to cover the rental loss each month but just doesn’t want to anymore. He has assets and doesn’t want to do a short sale. Is thinking of just walking.
    2. Homeowner gets married and now they have two houses and only need to live in one. They have assets and don’t want to do a short sale bc they’d have to come in w/cash at closing. They could turn it into a rental but they’d be upside down and don’t want to cover the payment.
    3. Homeowner is near retirement age and has lots of money saved for retirement and a huge mortgage payment attached to a house that’s over $100K upside down. Homeowner is thinking about walking away and moving out of state to start retirement. Doesn’t care about his credit score bc he’s retiring. Doesn’t want to do a short sale bc he’s got assets.

    This is only a small sample of the types of questions coming in from consumers. Every. day.
    I’m with Ray.
    They’re going to come back as REOs and it’s going to take years to work all these foreclosures through the system.

  15. 15

    People are fleeing Seattle by droves. Population is dwindling to 1940s levels. Highways are vacant…sidewalks empty. Somewhere, a child cries…in a lonely alley…as brown paper bags blow like tumbleweeds….

  16. 16
    Lurker says:

    RE: Jillayne @ 13

    2010 was year of the short sale and 2011 could be year of the REO

  17. 17
    David Losh says:

    And Congress is talking about doing away with the mortgage interest deduction. That’ll get a few million homes back to the bank.

  18. 18
    EconE says:

    RE: Jillayne @ 13

    Interesting to see the “example” questions.

    Could you provide some “example” answers to the above questions?

  19. 19
    TheHulk says:

    RE: Lurker @ 15

    This brings out an interesting question. In a post bubble market, what spikes first – short sales or foreclosures? I dont know the answer to that question, maybe wiser folks on this forum with more experience can comment on how this will unfold.

  20. 20
    David Losh says:

    RE: Lurker @ 15RE: TheHulk @ 18

    It is kind of interesting that Real Estate sales people, like Kendra Todd, are still pushing the short sale. I don’t understand why people put themselves through that unless they get to stay in the home, for an extended period, without paying. The foreclosure may be the same.

    I would like to know why people don’t just move, or stay until the foreclosure. What is the point of the short sale without a bankruptcy? Unless of course you are taking money to close, then again the question is why?

  21. 21
    Jillayne says:

    Econ E
    Everyone needs to talk w/an attorney before deciding to walk. Circumstances are different for each person. People with assets have the means to hire an attorney for an hour or two so the legal consequences can be laid out. People who are penniless can access free legal aid.

    The number of people considering walking away is just flooring me. People are hearing from friends that they can stay in their home for months…years after default before the sale and eviction. For folks in financial dire straits, this is a risk they tell me they want to take. I’m just one person but I do hear from a large cross section of folks.

  22. 22
    anonimaniac says:

    RE: Jillayne @ 13

    #1 and #2 are examples that rents are going down, not up. Lately there has been comments here that rents are going up and that is a harbinger of a recovery in real estate. Bogus, I say. I don’t trust the data that rents are going up just like I don’t trust the gov employment numbers. Someone is cooking the books. I have checked rents in a nice area of Seattle (close in, desirable, no commute, etc.) and they are going down for both houses and apts.

    Seattle is still at a holding pattern and about to see shocking price drops. Shocking because most people who have bought real estate in the last 25 years have never experienced bad economic times like the previous generations.

    Enjoy the ride and do what you can to protect those close to you.

  23. 23

    By Lurker @ 15:

    RE: Jillayne @ 13

    2010 was year of the short sale and 2011 could be year of the REO

    I’m not sure why you would say that. REOs have been outpacing short sales all year, and that was probably true in 2009 too. In King County there have been roughly 50% more REO sales than short sales in 2010 YTD.

  24. 24

    By EconE @ 17:

    RE: Jillayne @ 13

    Interesting to see the “example” questions.

    Could you provide some “example” answers to the above questions?

    I doubt Jillayne gives answers to questions like that. Legal advice.

    Edit: I didn’t see answer 20, but I’m glad she sees things my way! ;-)

  25. 25
    Macro Investor says:

    By Low Ball Jones @ 14:

    People are fleeing Seattle by droves. Population is dwindling to 1940s levels. Highways are vacant…sidewalks empty. Somewhere, a child cries…in a lonely alley…as brown paper bags blow like tumbleweeds….

    Wake up. You’re dreaming.

  26. 26
    Macro Investor says:

    By David Losh @ 16:

    And Congress is talking about doing away with the mortgage interest deduction. That’ll get a few million homes back to the bank.

    All talk, zero percent chance of happening. But don’t be surprised if they make it impossible to walk away from a debt. Remember who they work for – the banks, not you.

  27. 27
    EconE says:

    RE: Jillayne @ 20

    I’m actually not surprised at the number of people that are walking away.

    Tyler Durden was right…

    “The things you own end up owning you”

    Pretty amazing what a movie can teach you, eh?

  28. 28
    Lurker says:

    RE: Kary L. Krismer @ 22

    2009 was really probably the year of the short sale but it lasted into 2010 and it sounded better to say it that way :)

    Short sales took too long and always fell through so not surprisingly there were more successful REO transactions. But I said that really in more of a figurative manor – Everybody learned about short sales and how they were the path to get a bargain for a house. I would overhear conversations on a bus by complete strangers talking about short sales. Turned out, it wasn’t so pretty and nobody had the patience for it. In 2011 I have a feeling I’ll be overhearing casual conversation about buying foreclosures instead.

    b>RE: Macro Investor @ 25

    I agree

  29. 29

    By Lurker @ 27:

    Everybody learned about short sales and how they were the path to get a bargain for a house. I would overhear conversations on a bus by complete strangers talking about short sales. Turned out, it wasn’t so pretty and nobody had the patience for it. In 2011 I have a feeling I’ll be overhearing casual conversation about buying foreclosures instead.

    In that context it makes sense–people’s expectations.

  30. 30
    Jonness says:

    By LA Relo @ 8:

    The pace of reported or filed foreclosure proceedings may be easing, but I guarantee you the number of people who stop paying their mortgage and fall behind on payments is rising more than ever.

    At the end of November, the Federal Extended Unemployment Benefits program will end throughout the U.S., and it doesn’t look like another stay of execution will occur. This is bound to have a massive effect on the economy and housing market. WA is fortunate to have a additional 20-week extended benefits program that will help people stay in their houses a while longer. But it’s really looking like the writing is on the wall. A lot of well-intentioned people will have to stop making their mortgage payments.

  31. 31

    Wow… Looks like all that push to get banks to modify loans and help struggling homeowners really paid off!

    On the subject of short sales, it is amazing the different views on them. A lot of agents won’t touch them, many don’t know how to do them and while I can’t say I love doing them, I can usually get them to go through. At least I can if I am the one talking to the bank.

  32. 32
    Lurker says:

    RE: Kary L. Krismer @ 29

    Thanks for keeping me honest :)

    I think 2011 may go the same way too. There could be a foreclosure craze but eventually people will find out that REOs are not so pretty and they don’t have the stomach for it.

  33. 33

    RE: Lurker @ 32 – Short sales and REOs are somewhat related. If banks were better at doing short sales, there would be far fewer foreclosures. It’s too bad the NWMLS doesn’t publish official short sale stats, because being able to add that to the foreclosure number and make historical comparisons would be useful.

  34. 34

    RE: Jacqueline Cliff – Lynnwood Real Estate Broker @ 31 – The bank isn’t your only concern with a short sale. There’s also the seller who might not perform. I’ve never had that happen, but I’ve heard of it, and it makes sense that it would, especially if the seller wasn’t given good advice up front, or if they simply didn’t listen to the advice.

  35. 35
    David Losh says:

    The short sales of two years ago are at, or below fair market value today. I’m not understanding the buyer of the short sale. I don’t see banks approving an in house loss. The numbers for a short sale would have to add up in order for it to be approved.

  36. 36

    RE: David Losh @ 35 – What the banks need to account for is the lost interest during a foreclosure and the lousy marketing they’re likely to do of the property. In effect they need to compare the net of the short sale against a discounted net if they get it back.

  37. 37
    Drone says:

    RE: anonimaniac @ 22 – Rents are up for me. I’ve been monitoring a specific market segment that corresponds to where I like to live: Houses/townhomes/plexes of 2+ bedrooms w/ garage in Ballard, Greenlake, and Wallingford. Advertised rents are up 15%-30% from this time last year.

  38. 38
    Ben says:

    RE: Drone @ 37 – How many dwellings are you counting (sample size)? This does not square with the rest of the market. How can this be?

  39. 39
    deejayoh says:

    By Ben @ 38:

    RE: Drone @ 37 – How many dwellings are you counting (sample size)? This does not square with the rest of the market. How can this be?

    Not sure what your source of data is, but this site – which pulls from online sources of places for rent – shows that rents in seattle have been rising of late. Not to the extent the previous poster is seeing – but 8% is pretty substantial.

  40. 40
    Ben says:

    RE: deejayoh @ 39 – That’s why I was asking about the sample size. I’m trying to understand the context. This site shows that apartment rents are DOWN year over year and actually shows sampe size so you understand the data set better.

    http://www.apartmentratings.com/rate/WA-Seattle-Pricing.html

  41. 41
    Ben says:

    RE: Ben @ 40

    I’m trying to understand if there are appropriate apples to apples comparisons or cherry picked anecdotes. What is the evidence things have changed much from this article?

    http://www.businessweek.com/lifestyle/content/feb2010/bw20100211_554912.htm

    Seattle Sees Biggest Drop in Rental Prices
    Rental rates fell across the country in 2009 as people lost jobs and oversupply glutted markets. Seattle’s average monthly rent fell 13.8%

  42. 42
    deejayoh says:

    By Ben @ 40:

    not suggesting the other site is definitive either. Your link says it’s renter provided info – ” based on 6,489 renter reports on 757 Seattle apartments” . The one I linked claims to pull listings from 8k sites.

    I have no idea who is right.

  43. 43
    ex-WA says:

    RE: Kary L. Krismer @ 36
    My understanding is that it will often be more “profitable” to the bank to foreclose (instead of approve a SS) because they’ll get paid off by the mortgage insurance. (The difference between the REO sale price and the mortgage balance, I assume.) A couple of years ago we made an offer on a SS, got no response for months, then the house was foreclosed and sold as an REO for 30K less than our offer.

  44. 44
    Drone says:

    RE: Ben @ 38 – Nothing terribly scientific I’m afraid. I simply scan craigslist every day for places to live… a year ago, the cheapest prices I could find were $1100-$1300. This year, they’re $1300-$1900. These numbers are admittedly quite “fuzzy”… I’m going on my own subjective recollection regarding location, quality, etc. But I’ve been looking at these rentals every day for the last couple years and the fact remains that my individualized corner of the market is getting harder to live in.

  45. 45
    zipzippygc says:

    Ray’s slogan ‘they are all coming back’ is confusing me and, I am sure, other casual visitors. I find it requires too much inside knowledge of his stance, is vague, and, most importantly, does not define what ‘they’ are; what ‘back’ means; and what exactly ‘all’ is.

    I hope we can find some volunteers to clean up his slogan.

    He is on to something — a slogan can move mountains and congeal mindsets in an instant, but he has missed the mark, if indeed, there is something more salient.

    Any creative, but more exacting alternatives to Ray’s slogan? Or, if you have an opposing stance, how about offering your own sound bite?

  46. 46
    zipzippygc says:

    RE: Low Ball Jones @ 15 – What neighborhood? I could not find a parking spot, the bar was packed, the restaurant had a 45 min wait, the sidewalks were crowded, and the highway drive was 50 minutes with all lanes heavy.

  47. 47
    Jonness says:

    By zipzippygc @ 45:

    Ray’s slogan ‘they are all coming back’ is confusing me […]

    Any creative, but more exacting alternatives to Ray’s slogan? Or, if you have an opposing stance, how about offering your own sound bite?

    If you take a look at this link, you will see Zillow’s interpretation of the Seattle metropolitan market compared to other U.S. markets.

    http://www.bloomberg.com/news/2010-11-11/home-prices-fall-in-76-of-155-u-s-metropolitan-areas-on-bank-foreclosures.html

    Of course, many will criticize the accuracy of the numbers, because most people believe they are a lot smarter sitting in their armchair and scribbling on matchbooks than all of Zillow’s economists who have spent years getting PhD’s and 10-hour days racking their noggins over at Zillow headquarters. And who knows, maybe some of the armchair guys are smarter, but let’s abstract this part of the argument and just say Zillow’s numbers provide a good point of reference for what “they are all coming back means.”

    Most of the starving RE agents, with nothing left in the cupboards but Kool-aid, will tell you “now is a great time to buy.” But in truth, house price declines are on track to surpass the declines seen during the first five years of the Great Depression, with no signs of slowing down. This means, “now is a very risky time to buy.” Put another way, most people who bought homes in the Seattle metro area between 2005 and present can’t sell the homes for what they paid for them plus selling costs.

    Unfortunately, when homeowners start going underwater, a cyclical feeding frenzy gets established. More people stop paying their mortgage, which causes more foreclosures to come on the market, which causes more people to stop making payments, ad nauseam. The best example of this phenomenon is Las Vegas, which Zillow cites as being 80% underwater compared to Seattle at 27%.

    Not only does the vicious downward cycle affect homeowners, it also affects buyers. Banks tighten lending standards due to fear of default, and this means less people are able to buy homes. Also, homeowners who can qualify for loans tend to sit on the sidelines due to fear of ending up amidst the next batch of underwater homeowners.

    As less homes are built and remodeled, less people have jobs, which means there is less money in the economy. In addition, the opposite phenomenon occurs from what happened during the bubble when home values went up and people pumped tons of free HELOC money into the economy. That money pool has dried up, and people who buy homes, cars, vacations, and dinners must increasingly show up to the table with a certain amount of cash actually earned from working their $25/hr jobs.

    Well, it’s a lot harder to save up $50K working a $25/hr job than it is to get $50K in free HELOC money and go on a buying spree. So suddenly, the amount people earn on their paychecks has meaning again. In addition, many of the people making this money are already massively in debt due to binging during the bubble.

    The government is entering a gridlock phase where future stimulus money will be extremely unpopular, so the economy won’t get a lot of lift there. The FED is printing like crazy, but other than stock and commodity bubbles, this is likely to do little to solve the unemployment issue. Note that new jobs will probably grow at the rate of 100K/mo. or so, but since that many people or more enter the workforce each month, it won’t do a lot to bring down unemployment.

    And speaking of unemployment, the Federal unemployment extensions are on the verge of expiring, which means even more people will be defaulting on their mortgages, and there will be less money available to purchase consumer goods.

    Leading indicators don’t appear to be pointing toward a double-dip recession at this point in time, but it appears housing itself stands a better than 50% chance of a national double-dip. If this occurs, the leading indicators will most likely change to indicate a future economic double-dip as well. And if that occurs, hang on to your hats.

    In an economy where all of this chaos is occurring, cash becomes extremely meaningful. It is very risky to leverage yourself into a big mortgage payment to buy a house when prices are actively falling. One is much better off waiting for signs of stabilization and buying into a healthy market than buying into a lame market. It feels a lot better to have your home price go up by 5% per year than it does to have it go down by 5% per year.

    People will only remain stupid for so long. Eventually, they will realize there is no quick fix for the housing market, and they will act accordingly. In many cases, this will result in the keys being mailed back to the bank. Despite all the money the Fed is printing, this means your house buying dollars will continue to get more valuable as the mess continues to unwind.

    We are amidst the great deleveraging cycle. During such periods, people, as well as banks, tend to clean up their balance sheets as best they can, and this drives down the prices of overbought assets. This is a very healthy thing to do, but a certain amount of pain always accompanies the process.

  48. 48

    By ex-WA @ 43:

    RE: Kary L. Krismer @ 36
    My understanding is that it will often be more “profitable” to the bank to foreclose (instead of approve a SS) because they’ll get paid off by the mortgage insurance. (The difference between the REO sale price and the mortgage balance, I assume.) A couple of years ago we made an offer on a SS, got no response for months, then the house was foreclosed and sold as an REO for 30K less than our offer.

    Insurance can definitely affect short sale processing, but that simply means the decision should be passed up the chain to the insuring entity if they don’t want to delegate it. There’s no reason that an insurance company should be willing to take the $30k loss you mention any more than the lender.

    Stated differently, it would just be a different entity that wasn’t doing what they should be doing.

  49. 49

    By zipzippygc @ 45:

    Ray’s slogan ‘they are all coming back’ is confusing me and, I am sure, other casual visitors. I find it requires too much inside knowledge of his stance, is vague, and, most importantly, does not define what ‘they’ are; what ‘back’ means; and what exactly ‘all’ is.

    He has this belief that everyone is going to default on their mortgages because they’re underwater.

    It’s possible, but I suspect that the people that purposefully do that will be the same people that were buying in June 2007 convinced they were going to be able to sell for 20% more in two years.

  50. 50

    RE: Jonness @ 47 – I did a piece a while back on why those estimates of the number of houses underwater are BS. It includes a mention of Zillow. The title was: “Have We Become A Nation of the Extremely Gullible? (It’s on the Internet–It Must Be True!)”

    http://blog.seattlepi.com/realestate/archives/175675.asp

  51. 51

    RE: zipzippygc @ 45
    Agreed. ” They’re all coming back” sounds like a trailer for a Zombie movie.
    But it would be hard to translate. I don’t think Ray means that every single home that is currently worth less than the amount owned is going to be walked away from or foreclosed on. I think he means that we’ve only seen the tip of the iceberg as far as foreclosures and strategic defaults, and he expects a tidal wave to erupt. ( How’s that for really bad mixed metaphors?)
    I don’t completely disagree with him. The US government can’t continually bail out lenders. Right now there are a lot of homes where the owners have stopped paying the mortgages, but the banks, who now have zillions of these kinds of homes homes to deal with, don’t want to deal with it, and aren’t taking action to repossess these homes.They’ve got $ from being bailed out, and don’t have to count these homes as losses until they’re sold at a loss.
    But it can’t keep going on. I expect a significant increase of bank owned homes to go on the market.

  52. 52
    Jonness says:

    By Kary L. Krismer @ 50:

    RE: Jonness @ 47 – I did a piece a while back on why those estimates of the number of houses underwater are BS. It includes a mention of Zillow. The title was: “Have We Become A Nation of the Extremely Gullible? (It’s on the Internet–It Must Be True!)”

    http://blog.seattlepi.com/realestate/archives/175675.asp

    I mentioned in my post most armchair economists believe they know more than the PhD’s at Zillow who are working 10-hours/day. Since you appear to fall into this category, let’s analyze your claims.

    “Although I’ve not been able to locate a copy of the study directly, there are almost certainly a few problems with the study.”

    You start off by critiquing a study you haven’t even read. Thus, your entire critique is based on what you suppose as opposed to facts.

    1) “They most likely don’t know how much people owe on their houses today, not to mention the future.”

    You say “most likely,” but you don’t say for certain. Therefore, you admit there is a chance you are wrong about this claim.

    2) “They most likely don’t know the value of houses today.”

    You say “most likely,” but you don’t say for certain. Therefore, you admit there is a chance you are wrong about this claim.

    3) “They clearly don’t know what values with be in 2011.”

    Finally you have stated a fact, but this lone fact does little to support your argument without your other claims being supported by evidence which proves them factual. So your claim at this point is reduced to, “they can’t know what the price in 2011 will be, so it’s impossible to predict the percentage of people underwater at that point.”

    I agree with that claim, but this is in no way means statistical analysis of data cannot be used to estimate the percentage of people underwater in the past and present. And it doesn’t mean a company’s future price trend data cannot be used in conjunction with this information to extrapolate a potential future outcome that an analyst sees as “most likely.” Such an analysis doesn’t mean it will occur, but it certainly provides evidence that it could occur.

    Interestingly, I’ve seen you make many claims against non-NAR companys’ data, statistical analysis, and conclusions, but I’ve never seen you make claims against the analysis and conclusions of the NAR. Yet, the NAR is constantly making wild, speculative, and clearly bogus claims slanted in favor of now being a great time to buy a house. Is this because you are affiliated with the NAR?

    The most interesting thing about your Internet presence is, amidst the worst financial disaster that’s occurred in your lifetime of being a bankruptcy attorney and real estate agent, you’ve not once posted a warning to people about the dangers of losing everything they’ve worked their entire lives if they buy a house and house prices continue to go down. With all your experience supporting people who make major life-altering financial decisions, I would think this would be your #1 mantra. Unless of course, you stand to make a handsome profit by keeping mum on the topic. Which is why I suspect you continue to be extremely vocal about there being no proof that prices will go down, but you fail to warn people about the devastating outcome that will occur if they do go down.

  53. 53

    By Jonness @ 52:

    You start off by critiquing a study you haven’t even read. Thus, your entire critique is based on what you suppose as opposed to facts.

    It wasn’t for want of trying. If you look, there’s a bit of discussion about the study, and the conclusion seemed to be that it was a completely phantom study. But in the past, where the study is available, I look at it. That law professor’s piece on walking away comes to mind.

    1) “They most likely don’t know how much people owe on their houses today, not to mention the future.”

    You say “most likely,” but you don’t say for certain. Therefore, you admit there is a chance you are wrong about this claim.

    I think I addressed that more than adequately. I didn’t use the term impossible. If I had to write it over again I’d say: “Extremely unlikely to the point of someone having a better chance of knowing the next lotto number.” ;-)

    2) “They most likely don’t know the value of houses today.”

    You say “most likely,” but you don’t say for certain. Therefore, you admit there is a chance you are wrong about this claim.

    No, that one is impossible. Without going inside a house it is impossible to know what it is worth.

    3) “They clearly don’t know what values with be in 2011.”

    Finally you have stated a fact, but this lone fact does little to support your argument without your other claims being supported by evidence which proves them factual. So your claim at this point is reduced to, “they can’t know what the price in 2011 will be, so it’s impossible to predict the percentage of people underwater at that point.”
    . . .

    Again, equity = value – encumbrances. When it’s impossible to know value, and extremely unlikely that you would know encumbrances, it’s impossible to know equity. Any time you see a claim that X% of owners in a certain area are underwater, you should repeat to yourself three times: BS, BS, BS! Alternatively, you could say three times: “I am very gullible.” ;-)

    Interestingly, I’ve seen you make many claims against non-NAR companys’ data, statistical analysis, and conclusions, but I’ve never seen you make claims against the analysis and conclusions of the NAR. Yet, the NAR is constantly making wild, speculative, and clearly bogus claims slanted in favor of now being a great time to buy a house. Is this because you are affiliated with the NAR?</

    Like the phantom study above, I don’t think NAR publishes it’s studies, just the results. But in any case, I don’t think I’ve taken on any predictive study in the way you mention, other than perhaps to point out that you’d need to track about 30 different factors and if your prediction on one of them is off, then it would be likely your overall prediction was off.

    The most interesting thing about your Internet presence is, amidst the worst financial disaster that’s occurred in your lifetime of being a bankruptcy attorney and real estate agent, you’ve not once posted a warning to people about the dangers of losing everything they’ve worked their entire lives if they buy a house and house prices continue to go down. With all your experience supporting people who make major life-altering financial decisions, I would think this would be your #1 mantra. Unless of course, you stand to make a handsome profit by keeping mum on the topic. Which is why I suspect you continue to be extremely vocal about there being no proof that prices will go down, but you fail to warn people about the devastating outcome that will occur if they do go down.

    What I have said is that there is risk of owning any asset, and any asset would include houses or cash. Where I see risk that can be avoided, I do try to point it out, like 80/20 loans, the risk of buying into condos, etc. What I don’t think though is that I am some sort of God and that just because I wouldn’t do something (80/20 loan, variable loan, etc.) that no one should do it or that I should try to stop them from doing it. All I care about is that people have the information to make their own decision.

  54. 54

    RE: Jonness @ 52 – BTW, on the bankruptcy attorney comment, in my practice there were three things most likely to lead to bankruptcy: (1) Too much consumer spending (cars, credit cards); (2) Health issues w/o insurance or that affected income; and (3) Business defaults, probably in that order.

    As to the first item, one thing I have said for probably three years is that credit scores are a really bad tool for granting home mortgages. If you have $20,000 of credit card debt that doesn’t prevent you from having a good credit score, but IMHO it should prevent most people from getting a home loan. But it doesn’t.

    Somewhat related, I’ve also been critical of how banks look at the income and expenses of prospective home purchasers, particularly where perhaps they have really inexpensive living arrangements prior to buying the house and/or no real level of savings. Seemingly some of the loans they make are virtually certain to default because they don’t do a reasonable analysis of net income.

  55. 55

    Kary said” I mentioned in my post most armchair economists believe they know more than the PhD’s at Zillow who are working 10-hours/day.”

    If Zillow’s 10 hour a day economists are anywhere as accurate as their ” Zestimate” makers, I think we’ve got reason to worry.

  56. 56

    RE: Ira Sacharoff @ 55 – I actually mention the accuracy of Zillow in the “gullible” piece, with Zillow’s own stats at the time. It wasn’t that pretty, and those were the stats for this area, where Zillow tends to be more accurate. The piece I was dealing with though was a claim of nationwide stats.

  57. 57
    David Losh says:

    Real Estate is very easy to predict. We all know what the outcome of this last run up in pricing will be. Once you look at the financial markets, and what collateralized securities have done in the face of what has to be the biggest decline in property prices you know that we will be in a period of correction for maybe as long as a decade.

    Computer generated financial modeling took theory, and made it a fact.

    We are oozing cash into every corner of the world and this quantitative easing is just the latest attempt to get some global equilibrium.

    When you put that up against the price of Real Estate in Seattle there is no illusion that prices will fall back in line with economic realities in the region.

    I’m with you, and think this Case Schiller, Zillow, redfin, online modeling of what some one should pay needs to go out the window. We had the web 2.0 fiasco and now people are paying for that. All this so called transparency is today’s sales hype.

    You buy what you can afford to pay off.

  58. 58
    Jonness says:

    In order to gain authority on the matter, you must analyze the exact algorithm used and weigh its strengths and weaknesses. Simply saying, “it’s impossible to obtain their methodology; therefore, it sucks” is not a proper or meaningful proof. IMO, your article is built upon assumptions and short on facts.

  59. 59

    RE: Jonness @ 58 – Well if you want me to analyze it, find it for me. I’ve looked for it, others have looked for it, and it hasn’t been found.

    But in any case, it’s impossible to value a house without going in. That alone means their methodology sucks. Again equity equals value less encumbrances. If you can’t determine value you can’t determine equity.

  60. 60
    MK says:

    Yes
    , it’s become a ghost town…. but why is the traffic and parking such a pain in the ass
    RE: Low Ball Jones @ 15

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