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Weekly Scorecard 1-18-10

The numbers in West Bellevvue (WB) and East Bellevue (EB) were thin this week and as a result hard to get any meaningful trend but a couple of observations. In the solds for EB the very large waterfront pending from last month has closed. This home went substantially over $5,000,000. I left that home out of the sold averages for EB. WB had only one sold home and the home was a small older fixed up 2bd., 1ba. home that sold for $400,000. However the pendings continued to support an on going trend in WB that the properties being sold are mainly being acquired for their land value. That is why you see low sales prices but high per sq. ft. prices. This is starting to look like a real trend in WB. The reason as we discussed earlier is the depeletion of new construction inventory and lack of financing and econiomic support for new speculative homes.

South Bellevue (SB) was where all the action was. There were 15 solds homes in SB. A couple of bank owned homes and a number of short sales were in this batch. There was one waterfront townhouse in Barbee Mill and that townhouse was left out of the stats. The number of pendings was pretty healthy at 6. Also another non-waterfront townhouse went pendintg in Barbee Mill. It appears that Barbee Mill is starting to get some movement.

The spreadsheet link is here: Weekly scorecard 1-18-10

Tags: Bellevue Homes, East Bellevue, pending sales, pendings, sold, South Bellevue, West Bellevue
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Distressed Inventory Report 1-16-10

The numbers keep creeping up. East Bellevue is up to 111 homes total distressed inventory. West and South Bellevue held steady on their numbers for the week. However it appears the more moderate price range is starting to have some troubles. Those folks who have hung on are having problems finding a job and now the day of reckoning is approaching. These are the mid-level managers and higher end wage earners who have lost employment and find their employment prospects bleak. It was thought that the upper end, in particular West Bellevue, was going to be a disaster but that is not shaping up to be the case. Home prices are not moving up but even with the most expensive homes if the price gets to be the right level there appears to be plenty of buyers. At least enough demand to meet the present amount of inventory being created. However in East Bellevue those homes are not the luxury homes but great middle class homes in a great location but that portion of the market, middle income, seems to be struggling. Some job employment incentives and programs had better be created quickly or the trend of the shrinking middle class might start accelerating if some of these folks with good skills and experience don’t have the opportunity to put those skills and experience to use.

Here is the link for the spreadsheet: Bellevue Foreclosure Report 1-16-10

Tags: Bellevue Homes, Distress, foreclosure, inventory, notice of trustee sale, Weekly
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Local Banks

If you have been following the news you will have heard the FDIC came in and forced merged Horizon Bank with Washington Federal effectively shutting down Horizon Bank. If you were with Horizon Bank there is one good thing with Washington Federal, in my opinion, you are probably associated with one of the best run banks in the nation. However the disturbing part is that it appears many of our local community banks are on the edge right now. The problem is two fold. The first one is that by their own charters many of these banks were required to do community based lending. The result was that these banks did most of the lending to our local builder community to build the homes that the public demanded as a result of the credit bubble. Wall Street created the fancy CDOs which provided the easy credit for the buyer, the local community banks are the ones who provided the construction and development financing to the builders and developers that supplied the new homes and condos for those buyers. By the terms of their charter 65% of their lending was to be community based. This meant they were in some ways obligated to loan to these builders.

Our local new construction market is different from the rest of the country. For example go to the Phoenix area and you see the publicly held large national builders such as KB Homes, DR Horton and Centex as the ones who are building the most houses. These companies raise their money to purchase land and build houses by doing a combination of public bond offerings and corporate lines of credit with large banks such as Chase and Bank of America. In Washington State it is much different. 90% of the builders in our state build less than a 100 homes a year and are privately held. Some of the larger builders get their financing from large money center banks; mainly Wells Fargo, BofA and US Bank. However the bulk of the lending for new construction homes and condos was done by Frontier, Homestreet, Horizon, Sterling, Seattle Bank, etc. It is mainly due to these construction and development loans that has caused these banks problems. The value of these assets has declined so dramatically that a once healthy bank like Frontier that was on paper one of the strongest and most profitable in the nation is in such a bind. The other fall out from the potential failure of these banks is that they are also did a lot of local lending to small businesses such as small retail and service companies. These companies are struggling but are able to meet their obligations unlike a lot of the builders and if this credit disappears they have no where to turn. They can go to Chase and get a credit card with a high limit and an 800 number and a 24% interest rate as their alternative, not really what they need.

The irony here is that the Federal Reserve bailed out the money center banks and brokerages that created the mess with the CDOs and invented the sub-prime mortgages but the collateral damage that it caused with the regional banks is just looking to be flushed. As a matter of fact it gets even worse. Since the regulators failed so miserably with the money center banks they now have decided to get tough on the regionals. In fact they are going to the regionals and saying to them they want them to get out of community based lending but they have no where else to go to make money. They are basically real estate asset based lenders. They are not competitive on car loans, they can’t do large corporate based lending and they have no other sources of income so what do they do? On the other hand the money center banks are in a position to consolidate their market share. So what do you do? I would suggest buying stock in Chase (JPM) and hope Jamie Dimon is merciful to our local lending needs. .

The second issue regarding regulatory changes will be addressed in another post.

Tags: Banks, FDIC, lending, Monaey Center, Regional
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Weekly Scorecard 1-11-10

The numbers don’t say a whole lot this week. Overall volumes were low, particularly in West Bellevue. Of the two pendings however one was a tear down. South Bellevue had a number of pending sales at 10, will have to see if this an indicator of future volume. Overall inventories took a slight bump up as homes started being brought to the market for the new year. Probably will see this number move up the next month. Overall a little mopre activity than I thought we were going to see.

Click here for the spreadsheet: Weekly scorecard 1-11-10

Tags: inventory, pending, Scorecard, sold, Weekly
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Distressed Inventory Report 1-9-10

Well it has begun. The Notice of Trustee Sales are up. Not a whole lot but I think the trend we discussed of lenders finally getting their foreclosure process in order to deal with the new requirements of contacting the borrower prior to any sale seem to be getting in place. You will see there was hardly any foreclosed inventory due to the Christmas and New Year Holiday occuring on Friday. The traditional days for the Trustee sales to occur. Expect to see these numbers pick up later in the month. I think by the first week in February we will see this play out and get a good idea of the overall distressed inventory trend for the Bellevue Home Market.

Click here for the spreadsheet link: Bellevue Foreclosure Report 1-9-10

Tags: Distressed, Foreclosed, lender, notice of trustee sale, Weekly
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Weekly Scorecard 1-4-10

Here is the first report of the new year and new decade. On the surface it looks like a big drop in inventory but I would say it is not what it appears to be.  A lot of listings are set to expire year end; I know I had six; so it is hard to make any trend of the inventory number. A more accurate trend will probably not appear until the end of January as these homes get relisted. The big news which the spreadsheet does not show is the ramping up of new construction sales that are not forclosures. In MLS Area 500 4 of the 5 pe ndings were new construction. While there was pressure on the pricing these were not bank homes or short sales. Camwest had homes sell in both South Bellevue, West Bellevue and East Bellevue. Eric Campbell at Camwest has always done infill and been very price sensitive and I think he is going to have a good spring sales season if interest rates remain stable. In West Bellevue the numbers look low for the prices but that is because half of the sales were for tear downs. It appears with the depletion of the new construction inventory thatthe  building cycle is starting again. In the upper end no one is going to build speculative homes so it is presale or custom homes if the buyer wants a new home. Don’t expect to go out in the market anymore and find nuch suitable with the new construction inventory most of it is left overs.

 

The spreadsheet link is here: Weekly scorecard 1-4-10

Tags: inventroy, pending, Scorecard, sold, Weekly
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