{"id":27650,"date":"2013-10-31T06:00:33","date_gmt":"2013-10-31T13:00:33","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=27650"},"modified":"2013-10-30T22:54:32","modified_gmt":"2013-10-31T05:54:32","slug":"shadow-inventory-conspiracy-theories-are-nonsense","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2013\/10\/31\/shadow-inventory-conspiracy-theories-are-nonsense\/","title":{"rendered":"“Shadow Inventory” Conspiracy Theories Are Nonsense"},"content":{"rendered":"

For some reason, a couple weeks ago the Seattle Times website featured a syndicated article<\/a> about RealtyTrac’s “Vampire REO” nonsense<\/a>, which in addition to being a completely worthless bit of non-news, was already weeks old when it appeared on the front page of the Seattle Times website.<\/p>\n

In the comments to the article<\/a> I did my best to point out the misleading, sensationalist nature of the RealtyTrac “data.” A commenter going by the name of “IArustic” was not satisfied when I summarized the monthly foreclosure data I post here:<\/p>\n

The data shows a reasonable pattern of homes moving through the foreclosure pipeline, with foreclosures peaking in mid-2009 and generally declining since then. <\/p>\n

The number of homes coming out the end of the foreclosure pipeline (via Trustee Deeds and subsequent MLS sales) has moved in proportion to the number of homes coming in (via Notices of Trustee Sale). There is no evidence to suggest a growing number of homes being stuck in the process nor a giant backlog of “shadow inventory” that will burst forth any day now and collapse the housing market.<\/p><\/blockquote>\n

In response, IArustic argued that:<\/p>\n

Your monthly posts track the notices of sale, but not the MLS foreclosure sales, that I can see. I don’t see the data for your proportional claim.
\n…
\nI’m not arguing so much as asking a data guy to show me the data.<\/p><\/blockquote>\n

Ideally what we would be able to do is look at how many homes hit each stage of the foreclosure pipeline (described in detail in this post<\/a>) over a long period of time, rolled up by month. Unfortunately notices of default are not public record in Washington, so we can’t get that data, but thanks to my old friends at the technology-powered brokerage Redfin<\/a>, I was able to get counts of actual foreclosures, MLS listings of bank-owned homes (REO), and REO sales.<\/p>\n

Here’s what the pipeline looks like in King County since January 2000:<\/p>\n

\"King<\/a><\/p>\n

As you can see, it’s exactly what I described in the Seattle Times comment thread. Foreclosures, MLS listings of REOs, and subsequent sales of REOs have moved in direct proportion to notices of trustee sale (NTS) throughout the entirety of the data I have available.<\/p>\n