Short Sales Bounce Back, Bank-Owned Stay Low

Time to take look at what share of the monthly sales are being distressed sales—bank-owned and short sales. In June 2012 9.4% of the sales of single-family homes in King County were bank-owned. In June 2013 that number was just 5.7%.

Bank-Owned: Share of Total Sales - King County Single-Family

We’ve now matched the low of 5.7% set in November.

Short sales bounched back from their dramatic tumble last month, rising from 2.2% in May to 8.0% in June. A year ago 10.0% of sales in the county were short sales.

Short Sales: Share of Total Sales - King County Single-Family

The total percentage of sales that were distressed in May was at 13.7%, matching the level set in May 2009.

Distressed Sales: Share of Total Sales - King County Single-Family

Later this week we’ll take a look at how the median prices are moving for bank-owned homes, short sales, and non-distressed sales.

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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.

17 comments:

  1. 1
    Jay says:

    Here is an interesting article “Housing Bubble 2.0 Is Likely Peaking As I Type This And Economic Crisis 2.0 Is On The Way” from http://open.salon.com/blog/timinglogic/2013/07/04/housing_bubble_20_is_likely_peaking_as_i_type_this_and_economic_crisis_20_is_on_the_way .

  2. 2
    David Losh says:

    RE: Jay @ 1

    And the conclusion is that: “Corporations have simply tightened their renter capitalism grip over the last four years and thus have destabilized society even further. Any economic recovery has been an illusion primarily driven by corporate capitalism and investor class demand.”

    What we have is speculation: http://math2033.uark.edu/wiki/index.php/Commodity_Prices_During_Economic_Downturns

    Let’s look at oil: http://chartsbin.com/view/oau

    or gold: http://stockcharts.com/freecharts/historical/djiagold1980.html

    and compare it to Real Estate: http://www.ritholtz.com/blog/2011/04/case-shiller-100-year-chart-2011-update/

    It’s all the same speculation. The difference in mortgaged Real Estate is the banks didn’t need to buy anything, they made loans, some good, some bad, some paid a premium in interest, and fees, others took the money, and ran. It makes no difference, right now the banks own the property, and are selling at today’s prices.

    I forgot to mention the global banking bail outs that government debt is floating.

    The only question is if it will all crash, and I say no. We will have a steady decline in pricing as speculation becomes less of a sure thing, and capital is directed elsewhere.

    If we follow the land lord vision we’ll have more apartment dwellers, while those responsible renters buy into the reduced rent argument by having a fixed mortgage.

    I’d put up the consumer debt charts again, but nobody here seems to care. Then I’d couple that with under employment, unemployment, part time work, and contractors, where full time employment used to be.

    I’d like to hear where the consumer is going to get the money to pay for all these inflated prices, and why some people here think that will continue.

  3. 3
    mike says:

    RE: Jay @ 1 – In general, his article plays on a lot of the common fears people have about the potential aftermath of a unprecedented stimulus in an era of a weak global economy. However, some of the points he discusses as ‘proof’ of a problem similar to that before the previous housing bust are somewhat questionable and bear more than a hint of political motivation.

    Items like “food stamp use since Obama took office” is probably the biggest give away – yes, of course it’s way up given the lack of job creation. Authors that write about the housing bubble and use “the day Obama took office” as a critical point in the narrative timeline are either missing the bigger picture or injecting a largely irrelevant bias – as if the precursors to the bust were merely predictive of Obama being elected 5 years hence. Regardless of an individuals political leanings, an objective observer can see that the sucker elected to deal with the mess didn’t have much control over the past.

    Second, the appeal to obscure constitutional interpretations about how the corporate sponsored renter class isn’t what the founding fathers had planned. Smells like Tea Party ramblings largely devoid of historical context.

    Third – equating the drop off in mortgage applications – without breaking out refinance applications from purchase applications to the pull back that happened in the aftermath of the subprime bust is comparing apples to oranges. There is a big difference between refinances that are used to pay the mortgage and speculate on housing and simple rate/term re-fi’s to take advantage of a rate drop.

    Bottom line, anyone that tries to come up with a coherent economic analysis littered with political ideology and vague data analysis has equal odds of being right as the guy holding “the end is near” sign on a busy street.

  4. 4
    Jay says:

    RE: David Losh @ 2 – I actually do read all your blogs regularly! So it is not true that “nobody here seems to care”. Your articles are very helpful! Thanks.

  5. 5
    corndogs says:

    This is a carryover from the June reporting post. This is in response to Oneballman.

    RE: corndogs @ 36 –

    “So from your lack of response to the substance of my comment, I guess you admit that your comment #13 was partially incorrect and primarily just another boastful rant to belittle others and satisfy your own ego.”

    Actually Oneball, I didn’t realize you had a point. Going back and weeding through your overly verbose diatribe, I think you were implying that I was wrong when I said prices DIDN’T go down for the Winter. You mention the Case Shiller Index, but if you had a brain, you’d realize that Case Shiller is a composite of King, Pierce and Snohomish County. Tim was talking about King County only. He posts a chart monthly showing the median price. In September when he made his prediction that prices were heading South the median was 375K, by year end it rose to 380K, so the price he was talking about did not go down for the Winter it went UP! So yeah, Corndog has never made a faulty prediction on this site yet. If you find one post a link. You are obviously too stupid to research a simple post and articulate a valid argument so you are also at parity. 1 Losh for you. I’d like to say you are less than 1 Losh but that would be dishonest. It’s very hard to be that stupid, but you’re close.

  6. 6
    Erik says:

    RE: corndogs @ 5
    I felt like this may be my opportunity to take you down, so I scoured the internet trying to find something. Here it is….

    “I’d expect a relatively large percentage increase in the low tier in the next few years”~CD

    This comment was made on 11/1/12. It hasn’t been a few years yet, but so far the low tier has increased the least. It sounded like you were predicting it would increase the most when it was given some upward force. You gave the example of how low tier has the least mass and will be affected the most when things turn. That hasn’t happened so far. Seemed like a faulty prediction.

    https://seattlebubble.com/blog/2012/10/31/case-shiller-tiers-low-tier-hits-break-even/

  7. 7
    corndogs says:

    RE: Erik @ 6 – Erik, the low tier is going to have it’s day, that’s the dumb money. I said a few years, because I meant within a FEW YEARS, It’s barley been six months. Corndog said all tiers would be approaching CSI 165 by mid 2014. Wait a few months, you’ll see we’re getting very close with still a year to go.. The lowest tier doesn’t have to pop up much in the next year and a half to be the percentile winner.

  8. 8
    One Eyed Man says:

    RE: corndogs @ 5

    So even after I told you in my original comment that I was aware of the change in the median and not to confuse median, which is affected by mix, with a more dedicated measure of price change, like Case Shiller, you’ve now pulled the median out of your . . . well lets just say “hat.” I’m sure The Tim knows the weaknesses of median as a price measure and when it comes to price change, he spends a couple of posts each month devoted entirely to the Case Shiller Index as opposed to the MLS median. Furthermore, you said yourself in post #10 of the other thread that, “Case Shiller is the only thing of value that ‘The Tim’ posts.” In that context, I find your response above at best unpersuasive and at worst a disingenuous attempt to protect your ego at the expense of the facts.

    Maybe if you were a little more interested in the facts and the analysis and a little less interested in being some self aggrandizing internet bully, I’d give you a compliment. You don’t need to kick sand in peoples face to tell people they’re wrong or to add a little humor to the discussion. I apologize for perhaps being cruel and hurtful to you with cheap bathroom humor (which I personally find really funny). You can deny it hurt, but if it didn’t you wouldn’t have responded to my prior posts the way you have.

    In my opinion you seem to lack any sense of empathy for those you engage on this site and you seemed to need the taste of a little sand. But then again, you probably view empathy as a recessive trait that just makes one weak and uncompetitive. I will say this corndog, you’ve done something I would have said was impossible. You’ve made me think I might want to become a Democrat.

  9. 9

    RE: One Eyed Man @ 8

    I Agree

    I didn’t Corndog’s “name calling”. It shows lack of intelligence and “pig-headedness”.

  10. 10
    Erik says:

    RE: corndogs @ 7
    It’s been over 8 months. The final verdict isn’t in yet, but it is something we are going to watch. One eye will be staring at this with his one good eye. If the government doesn’t bail us low tier people out again, we may just stay at the bottom. We are low tier for a reason.

    You also said CSI would be about 165 for all tiers by mid 2014. Something else for us to watch.

  11. 11
    David Losh says:

    RE: corndogs @ 5

    You’re following trend lines, that’s different from making predictions.

    I think everyone here agrees that the price of housing has been going up since 2011 when interest rates dropped by a full point. It’s an inflating bubble in the price of housing.

    So, you are saying that because the Fed lowered interest rates by manipulating the mortgage market you had some insight, but we were all aware of that.

    Now we are in an interesting part of this cycle where today Congress is talking about getting rid of the mortgage interest deduction: Congressional action on the U.S. tax code could dramatically alter one of its sacred cows: the mortgage interest deduction. And the change could come in 2013.

    So what I look at is the economic factors that go into your price increases, and you want to discuss median pricing, Caser Shiller, or you might as well include, redfin, Trulia, and Zillow as your proof the price of housing is rising.

    So you got 30% price increases, but Real Estate is a highly leveraged, high fee investment to capture that equity.

    What bubble blogging is about is the deflation of the pricing bubble.

    Bottom line is I think the large investors, the hedge funds, are going to income average, the way they do, and lower the price of housing to squeeze out smaller investors, the way they are doing to the family owned home building companies.

    Rising mortgage rates, and the loss of the mortgage interest deduction would be very hard to overcome as a small investor in Real Estate. Larger companies fat with cash reserves can out perform smaller investors, make money, make that 6% return, and manage the properties by pure cash flow.

    These guys aren’t stupid, and while you’re watching sales data they are taking over.

  12. 12
    Erik says:

    RE: One Eyed Man @ 8
    Yeah, join us democrats. We are going to meet at the pub around 6pm tonight and figure out how we can qualify for government welfare programs. I’ll help get you set up on collecting government cheese for years to come.

  13. 13

    RE: David Losh @ 11

    I Agree With You David, Especially on Multi Unit Purchases With Cash

    I read the national job market had a 360K increase in part time positions and a 240K decrease in full time positions in June…..yet they still want a lion’s share of your net pay for rent in Seattle. Cash real estate investors for rental apartments better watch more than a shrinking U3 unemployment rate or they’re the buffoons.

  14. 14
    Blurtman says:

    RE: Erik @ 12 – Is that before or after we bomb the Goldman Sachs building? (Just kidding, NSA contractor.)

  15. 15
    corndogs says:

    RE: One Eyed Man @ 8 – Case Shiller is a composite of King, Pierce, and Snohomish. You should just admit at this point, you messed up and didn’t understand ( I thought you said you admit your mistakes?, I guess not). The conversation was regarding King County median prices. Do you understand that or do you think being overly verbose again somehow hides your ignorance? King County prices did not go down for the Winter, they went up. Case Shiller does not reflect King County prices so is invalid for your argument. I can understand your error because they call it the ‘Seattle’ region. You were wrong, you lose. Are you going to concede that, or continue out of stubbornness because you went out on a limb and it got cut off? The comment was specifically on a post with Tims King County median price chart displayed…. there was no Case Shiller in the discussion, whatsoever.

    Even if Case Shiller was the chart we were using. Prices were statistically flat for that as well. So my point was true, the large dips that happened in the previous years did not happen.

  16. 16
    One Eyed Man says:

    RE: corndogs @ 15

    In comment #10 of the July 5, 2013 thread where this started you said:

    “Case Shiller is the only thing of value that ‘The Tim’ posts.”

    Then in comment #13 of the same thread you talk about “price” and some thread back in Sept 2012 with no mention of “median” and “King County”, and you basically call The Tim a fool for making some reference in 2012 to seasonal price drop coming in the winter of 2012/2013. Now you’re saying that your discussion with The Tim in 2012 was about “median” price and “King County” price and telling me I’m a fool for not searching your comments in 2012 so that I would know that.

    Assuming your Sept 2012 comment was about “median”, at best it sounds to me like you’re now claiming you’re brilliant for making a prediction about a metric that you just said has no value? Even if you were right, that doesn’t sound particularly brilliant to me because by your own admission if you weren’t talking about CSI, you were talking about something unimportant.

    Then you tell me “you lose” like this is a competition as opposed to a forum for people to discuss and learn about real estate. Just so you know Corndog, I can’t lose because I’m not competing with anybody. I’m just interested in discussing and learning about real estate (with a little humor thrown in) probably like most of the people who read this blog. To me, the only people “WINNING” on this blog are the people who learn something cause that’s what I see as the purpose of being here.

  17. 17
    David Losh says:

    RE: One Eyed Man @ 16

    Good morning!

    What the heck are you doing?

    You fell into the bubble buyers trap of confusing any issue to prove they are right to have bought housing units as an investment in the future.

    We all know that the future holds a declining price for housing, because after all this is a bubble blog.

    .

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