May Stats Preview: Spitting in the Ocean Edition

It’s time yet again to check in on our monthly stats preview for King and Snohomish counties. Most of the charts below are based on broad county-wide data that is available through a simple search of King County and Snohomish County public 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.

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

King County Warranty Deeds

Still down fairly substantially from last year’s mad rush to beat the tax credit deadline. Not the lowest May on record though. May 2011 beat out May 2009 (which had just 1,929 WD) for that title.

Here’s a look at Snohomish County Deeds, but keep in mind that Snohomish County files Warranty Deeds (regular sales) and Trustee Deeds (bank foreclosure repossessions) together under the category of “Deeds (except QCDS),” so this chart is not as good a measure of plain vanilla sales as the Warranty Deed only data we have in King County.

Snohomish County Deeds

Strange pattern we’ve seen most of the year—Deeds are up about 10% from last year, even though closed sales have been falling fairly consistently. Must be an increase in the number of Trustee Deeds rather than Warranty Deeds. On a related note, you’ll be reading a lot more about one of those 1,403 Deeds in the coming weeks…

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

Snohomish County Notices of Trustee Sale

Trending down month-to-month and year-over-year in both counties for three months straight. Possibly a trend pointing toward recovery, or possibly just another legislation-induced glitch.

Here’s another measure of foreclosures for King County, 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

Meanwhile, although homes entering the foreclosure pipeline seem to be decreasing, there’s no noticeable drop in the number of homes actually being repossessed by the bank.

Lastly, here’s an update of the inventory charts, updated with the inventory data from the NWMLS.

King County SFH Active Listings

Snohomish County SFH Active Listings

First semi-decent increase in inventory all year in both King and Snohomish. Finally starting to see a little selection out there.

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.

36 comments:

  1. 1

    Is the Seattle Bubble watermark on the graphs something new?

    I’m not really sure the graph format makes sense for foreclosure data, other than for consistency with the other data. I don’t see foreclosures being seasonal (although as you note they are affected by legislation).

    What might be better is an average number of notices or deeds per month, going back to at least 2007.

  2. 2

    Housing Inventory is Similar to the Unemployment Count Method

    Unemployment goes down as job seekers giveup [or unemployment benefits end]. Housing inventory goes down as sellers face paying down principles to lower the price in order to sell their underwater investment….so the underwater sellers sit tight, what choice to they have….produce a wad of money with a magic wand?

  3. 3

    RE: softwarengineer @ 2 – Actually, it’s a bit different. Simple supply/demand theory would tell you that fewer people want to sell at lower prices. So part of that is normal (as was the increase in inventory when prices were high). But you’re right part of the problem is people being unable to sell–and that’s largely due to the problem with short sales.

  4. 4

    RE: Kary L. Krismer @ 3

    I Agree Kary

    I was just talking to a business board acquaintance from Snohomish County and he wants me to drive around with him and see all the empty homes [not for sale] and apartments; held back by banks. He said some even had Christmas decorations on them….God forbid we put ’em all on the market at once, we’d get pennies on the dollar for all homes if that happenned….LOL

    He agreed with you too on belligerant sellers not willing to negotiate price. One example he gave is Baby Boomers heading for nursing homes with subsequent/mandatory home sale to pay for nursing care….their kids have power of attorney and they’re darn well not gonna decrease the price yet, even though they could, but don’t have to, yet….

  5. 5

    RE: softwarengineer @ 4 – There are some that have moved into such facilities and then had to move out because they never sold their place. I’d love to somehow break into that market and do a bit of arm twisting, but it can be tougher with older people. They can be pretty set in their ways.

  6. 6
    nk shore says:

    Is it possible for you to include Kitsap County stats in your blog? While we are not as populated as the other 3 counties; I would argue that we have a significant contribution to the seattle economy.

  7. 7
    Ray Pepper says:

    RE: nk shore @ 6

    ” I would argue that we have a significant contribution to the seattle economy.”

    yes, and Olalla ROCKS!

  8. 8
    Blurtman says:

    RE: softwarengineer @ 4 – The banks essentially have turned into market makers for housing.

  9. 9
    No Name Guy says:

    Lots of empty houses in my neck of the woods (South Sno Co, south of 196th St, between 5 and 405).

    Running and driving around the ‘hood I notice the houses that “used” to be for sale and are now vacant. Grass is unmowed, no window coverings, etc. They can be spotted a mile away, as can the former foreclosures since sold (look for the bright red, recently painted door).

  10. 10

    No Name Guy,
    That’s my ‘hood.
    I wanna see what you’re seeing.
    Tell me where to go. Lynnwood? Edmonds? Terrace? Brier?
    Thx.

  11. 11

    By Jillayne Schlicke @ 10:

    Tell me where to go.

    Five words I will never post here! ;-)

  12. 12

    In Snohomish County out of 3697 active listings, 1644 (56%) are vacant.

    Also, in Snohomish County, for the last 4 months, REO sales have actually outpaced actual foreclosures.

    I have absorption rate graphs on my blog for both King and Sno. County.

    Statistic not compiled nor published by NWMLS.

  13. 13
    Scotsman says:

    You heard it here first- just back from CA, the state that leads in all things housing. Now is a great time to buy- interest rates are low, but poised to go up. And experts are predicting housing will bottom later this year, then head up in 2012!

    Seriously- I heard it on the radio- from a mortgage broker. Those guys (gals) know finance and economics like few others, so it must be true!

    I almost wrecked the car. You people are lucky I’m still here. ;-)

  14. 14
    Scotsman says:

    Follow-up to the above comment- just got the Redfin email full of Tim’s carefully prepared stats and Glen’s commentary. Fearing an assault on their credibility, Glen is busy explaining past calls.

    Let me make it as simple as possible for you. Prices will continue to fall. Look at the facts, number one of which is that current incomes can’t support current price levels- hence the high and growing number of foreclosures. If current incomes can’t support current levels of ownership at current prices, how are these same incomes going to suddenly start driving prices up, especially when financing costs and availability are moving in a negative direction? Add to that the fact that the raw number of employed people is shrinking along with their discretionary incomes and you have an environment that flows to one conclusion: prices must continue to fall.

    Disclaimer- I’m not a Realtor, nor do I play one on T.V. All real estate is local- consult your local Realtor to find out more about home markets in your area. Opinions not appreciated by or supported by the local NWMLS.

  15. 15
    The Tim says:

    By Scotsman @ 14:

    Look at the facts, number one of which is that current incomes can’t support current price levels- hence the high and growing number of foreclosures.

    A couple problems with this.

    A) Foreclosures seem to be falling (link 2), not growing.

    B) Today’s foreclosures indicate that people who bought during the bubble can’t afford their homes with their current income, not that people buying homes today can’t afford them on their incomes.

  16. 16
    patient says:

    It would be interresting to see trustee sales plotted on the same graph as trustee deeds to look at the correlation, perhaps also with a cumulative plot for each of the two measures. I talked to a friend who is an owner this weekend and when he asked specifically I told him that I currently would guess that we have another 15%-20% to fall over the next 3-4 years. His reaction was very different than what I’m used to. Instead of calling me a doomsday nut he just said, I hope you are wrong but I wouldn’t bet against it. Times are changing.

  17. 17
    Scotsman says:

    RE: The Tim @ 15

    I think it’s disingenuous to suggest foreclosures are falling based solely on the number of new foreclosures being currently processed. Inventory backlogs are at record levels. Payment histories are continuing to deteriorate, albeit at a slower (at least currently) rate. A collection of points from your referenced links:

    “We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO.”

    “this is just a portion of the total REO inventory. Private label securities and banks and thrifts also hold a substantial number of REOs.”

    “As Freddie noted, the pace of foreclosures will pick up this year, and so will the pace of REO sales”

    And in truth, payment histories are at best holding steady or continuing to deteriorate in terms of raw numbers (no seasonal adjustment). That means increasing foreclosures down the road, as Freddie/Fannie themselves confirm. And again, all of this assumes a steady employment situation and macro environment. You know how I feel about that. ;-)

    Your point “B” is valid as stated, so I should clarify my original intent. If people can’t afford to hold onto the homes they have that means more homes coming to market through the foreclosure process or otherwise forced sale, then most likely selling at prices that undercut the non-foreclosure/distressed market. This will drag down values for all homes.

    Could they afford their current home with a 30% price cut? Maybe. Can they afford any home, given that something has changed to create the situation where they can’t afford their current home? That’s an important question. You seem to assume they can. I think it’s more likely that due to unemployment, etc, they are currently out of the home buying pool. Fewer potential buyers means lower prices.

    Can today’s buyers afford what they are buying? Duh- you got me there. Visualize me groveling. But also refer to the point in the paragraph above- that’s the meat. Question of the day- are there fewer qualified buyers today, even with reduced prices, given tougher qualifying standards, less willingness to risk future price declines, and uncertainty about future employment? I’d say yes. Outside of a few wealthy technocrats buying charming bungalows in Everett, most are holding back. Remember when we had something called the “spring bounce?” What is going on in the underlying market structure when that stalwart of the realtors annual expectations fails to appear?

  18. 18
    Blurtman says:

    Things could be worse.

    “On sale since 2006, and they’re still in denial! It’ll be their 5 year anniversary of chasing the market down on the 26th. Oh man, I want the juicy listing data to see where these geniuses started at and how they overplayed their hand for 5 years. How the hell do you try and sell in 2006 and FAIL? SERIOUSLY? They must have priced this bitch at 1.2 million or something to start.”

    http://www.burbed.com/2011/06/02/five-years-of-circling-the-drain/

  19. 19
    Scotsman says:

    RE: Blurtman @ 18

    Forget the pricing. I want to know how you get 5 bedrooms and 4 bathrooms into 1620 square feet and have room for anything else.

  20. 20
    ricklind says:

    By Kary L. Krismer @ 5:

    RE: softwarengineer @ 4 – There are some that have moved into such facilities and then had to move out because they never sold their place. I’d love to somehow break into that market and do a bit of arm twisting, but it can be tougher with older people. They can be pretty set in their ways.

    I take this as evidence that we have not yet hit the “capitulation” phase of the cycle.

  21. 21
    Jonness says:

    By The Tim @ 15:

    By Scotsman @ 14:

    Look at the facts, number one of which is that current incomes can’t support current price levels- hence the high and growing number of foreclosures.

    A couple problems with this.A) Foreclosures seem to be falling (link 2), not growing.B) Today’s foreclosures indicate that people who bought during the bubble can’t afford their homes with their current income, not that people buying homes today can’t afford them on their incomes.

    I don’t disagree, but taking the next step, I would argue a good indicator of recent affordability is current level home sales–which are down despite record low mortgage rates, freely available government insured subprime loans, and a community of respected real estate experts who call a new price bottom each passing month.

    Yet, after 3 years without a mortgage payment my neighbor is still living rent free. I don’t perceive what’s occurring is indicative of anything near a healthy balanced market. The shadow inventory out there is massive and will require years to fully work through. We are judging the foreclosure rate through veiled glasses. The published rate has nothing to do with actual inventory and everything to do with masking factors.

  22. 22
    ARDELL says:

    RE: Blurtman @ 18

    Love the name of the “community” on that one: “East of US 101”. Sounds like a gang. :)

  23. 23
    MichaelB says:

    Redfin Mgmt: “Tim, we think it might be a good idea if you were to align Seattle Bubble a bit more with Redfin’s outlook..You know, like Deejayoh. ..”

    Tim: “What do you mean?..”

    Redfin Mgmt, “You know, talking the market down just results in fewer buyers – it’s like a self fulfilling prophesy”

    Tim: “I could put together some charts…”

    Redfin Mgmt…”Our business model can only grow and make the big IPO, if we get more buyers into the market…if there aren’t many buyers, the business model just doesn’t work that well.. and we don’t get to execute our exit strategy…You wouldn’t want that now would you Tim?”

    Tim: “Well, uhh No… I guess I wouldn’t…”

    Redfin Mgmt: “..We need commentaries to be a bit more neutral – you know, “things are gonna be a bit up and down…but there are some good deals out there.. some good homes are getting multiple offers – stuff like that…”

    Tim: “I could buy a house in Everett!”

    Redfin Mgmt: “Hmm..interesting angle…”

  24. 24
    MichaelB says:

    Duplicate

  25. 25
    BillE says:

    By Scotsman @ 17:

    Can they afford any home, given that something has changed to create the situation where they can’t afford their current home? That’s an important question. You seem to assume they can. I think it’s more likely that due to unemployment, etc, they are currently out of the home buying pool.

    If they can’t afford their current home, then the credit hit from a foreclosure or short sale is going to keep them on the sidelines for a few years.

  26. 26
    LocalYokel says:

    RE: MichaelB @ 22

    :)

  27. 27
    nk shore says:

    RE: nk shore @ 6 – ill take that as a NO!

  28. 28
    Scotsman says:

    RE: BillE @ 25

    Great point. What percentage of the potential buying pool will be locked out for years?

  29. 29
    David North says:

    You can’t necessarily infer from decreasing Notices of Trustee Sales that foreclosures are declining. If banks were more patient in the past, deferring trustee sales repeatedly and thus issuing more NTS’s per actual foreclosure, and now have become less patient, deferring trustee sales less often, NTS’s could decline while actual foreclosures rise.

    Also, any decline in foreclosures could likely be attributable to a higher rate of success with – and volume of – short sales. I saw a remarkable figure yesterday. 69.5% of the pending sales in my office are short sales, and we don’t have a single broker in the office who focuses primarily in short sales.

  30. 30
    Scotsman says:

    RE: David North @ 29

    ” 69.5% of the pending sales in my office are short sales, and we don’t have a single broker in the office who focuses primarily in short sales.”

    Time to alter the business plan?

  31. 31
    David North says:

    By The Tim @ 15:

    By Scotsman @ 14:

    Look at the facts, number one of which is that current incomes can’t support current price levels- hence the high and growing number of foreclosures.

    A couple problems with this.

    A) Foreclosures seem to be falling (link 2), not growing.

    B) Today’s foreclosures indicate that people who bought during the bubble can’t afford their homes with their current income, not that people buying homes today can’t afford them on their incomes.

    Here’s one quote from Freddie from the link you provided:

    We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO.

  32. 32
    Lurker says:

    By Scotsman @ 28:

    RE: BillE @ 25

    Great point. What percentage of the potential buying pool will be locked out for years?

    RE: Scotsman @ 28

    Well all of those first time home buyers that rushed out to get their credit are underwater and won’t be around for good while. Then you have those that lost their homes, they will be MIA because of poor credit scores and no dough. What’s left are new first time home buyers entering the market, the “pent up” buyer that has been sitting on the fence all this time, investment money and then the typical move up buyer which I think traditionally makes up most sales activity.

    But the potential move up buyers that are underwater are locked out and perhaps even the ones slightly above since they may not have the equity or savings for a down payment.

    It doesn’t seem like a very solid pool.

  33. 33

    RE: Lurker @ 32 – I think the biggest number of locked in buyers may be in condos. Specifically I’m thinking of those who perhaps bought a bit earlier in their life cycle than what they would have otherwise.

  34. 34
    deejayoh says:

    By MichaelB @ 23:

    Redfin Mgmt: “Tim, we think it might be a good idea if you were to align Seattle Bubble a bit more with Redfin’s outlook..You know, like Deejayoh. ..”Tim: “What do you mean?..”Redfin Mgmt, “You know, talking the market down just results in fewer buyers – it’s like a self fulfilling prophesy”Tim: “I could put together some charts…”Redfin Mgmt…”Our business model can only grow and make the big IPO, if we get more buyers into the market…if there aren’t many buyers, the business model just doesn’t work that well.. and we don’t get to execute our exit strategy…You wouldn’t want that now would you Tim?”Tim: “Well, uhh No… I guess I wouldn’t…”Redfin Mgmt: “..We need commentaries to be a bit more neutral – you know, “things are gonna be a bit up and down…but there are some good deals out there.. some good homes are getting multiple offers – stuff like that…”Tim: “I could buy a house in Everett!”Redfin Mgmt: “Hmm..interesting angle…”

    Some specific issue to which you are referring? I haven’t even commented on this post. Or do you just have an issue with adding my name to posts and attributing viewpoints to me that I haven’t expressed?

  35. 35
    fubarrio says:

    By ARDELL @ 22:

    RE: Blurtman @ 18

    Love the name of the “community” on that one: “East of US 101”. Sounds like a gang. :)

    e palo alto is known by locals to be pretty ‘ghetto’ — 500k+ for 1600 ft 2 would have been pretty expensive even in 2006 for that ‘hood….5 bed 4 bath — I’m imagining a LOT of illegals sharing the space….I could be wrong, but it would be consistent with the neighborhood. Ironically, palo alto on the other side of the 101 was home of the 1000 USD/ft2 bungalows as far back as 2004.

    fB

  36. 36
    Jonness says:

    By Lurker @ 32:

    But the potential move up buyers that are underwater are locked out and perhaps even the ones slightly above since they may not have the equity or savings for a down payment.

    Even the ones well above water must first sell their house before they are able to buy another one. This is easier said than done due to the financial squeeze on new buyers and the competition from bank sales. Homes sold by banks as REO’s or short sales do not result in a move up sales; thus, if the market is 1/3 bank sales, it removes a third of the typical move up sales right there (minus normal investor traffic).

    It’s beyond me how anyone can even pretend we are witnessing anything even close to a normal balanced RE market. The only thing sustaining sales and prices is unprecedented amounts of government stimulus that is robbing our nation of its wealth over the long run. And as soon as the government stops spending $8 in order to pump GDP $1, we plummet back down toward reality, but this time have a mountain of debt on top of our prior problems.

    http://charleshughsmith.blogspot.com/2011/06/can-we-please-stop-pretending-gdp-is.html

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