Distressed Inventory Report 12-19-09
Well it has happened. In every market the distressed inventory declined a little but the NTS/Foreclosure ratio went up. What this means is that more homes are being given their “Notice of Trustee” (NTS) sale than homes that were bank owned. In order to establish a trend both numbers need to move in the same direction. Having this oscillation along with conflicting ratios and inventories with the NTS/Foreclosure ratio up and the overall inventory down means we are just oscillating in a trading range.
In talking with the one of the owners of the local Trustee Services; these are the guys who post the sale and take the property through foreclosure as the “Trustee” for the owner; said that there will be a rising swell of foreclosures the first of the year. This will be caused by the banks figuring out how to deal with two big changes in the law. The first is that in Washington State 30 days has been added to the foreclosure process since lenders are now required to try to make contact with the borrowers in order to see if there is an alternative to foreclosure. The shortest time period that can occur for foreclosure from when the payments were last being made is 220 days. The other law that changes things is a federal law that states if there is a tenant in the home now the tenant will have 90 days to vacate. This one is very interesting and is causing some strange dynamics. Some of the owners aware of these laws are now renting out bedrooms in their homes or vacating the property and renting it. They don’t make the payment and they keep the rent. Technically once the foreclosure occurs and the bank takes title to the property, the bank is entitled to the rent but good luck getting the money. Theoretically an owner could stop making payments and get almost a year’s rent while the property goes through foreclosure and the bank takes possession. If you have a very shrewd owner they could try to renegotiate the loan or short sale the property and pull out at the last minute and drag the process out to 18 to 24 months and keep collecting rent. If more owners wise up to this it could throw a big wrench in the works before the lender can get possession of the property and be able to sell it.
The one that is pretty certain is that most of the new construction available has been foreclosed on and that inventory will decline. I am now seeing banked owned newer homes in good locations like West Bellevue, Mercer Island, Kirkland and The Reserve at Newcastle that are well priced now have multiple offers and these are homes well over a $1,000,000. One just went on Evergreen Point Road in 5 days that was listed for a $1,399,000. I suspect it went over full price. Also in November a lot of the Lux and Bayridge inventory in Kirkland that had been foreclosed on and sitting got cleaned out. In the Reserve at Newcastle there are no new listed homes at this time. This time last year there were over thirty listed homes now it is about five. Looks like more homes coming but from what I am seeing they will be older resales so you had better get to know the folks at Home Depot.
The link for the spreadsheet is here:Bellevue Foreclosure Report 12-19-09