Seattle Real Estate Dumping Bargains in the Foreclosure Bin

In Q3 of 2010, CoreLogic had Washington underwater mortgages at somewhere between 15 and 29 percent of homes (scroll down this blistering ZeroHedge post to see the map). With an unemployment rate holding steady around 9 percent for the past...year, and the 99ers dropping off unemployment eligibility, that combination leads to the following statistics:

Realty Trac foreclosure heat map

In King County, Realty Trac currently shows some 1,400 homes for sale, with over 6,300 bank-owned properties. They say there were 438 King County foreclosures in December alone. This Bellingham Herald story breaks out Washington counties with the highest 2010 foreclosure rates; the percentages are frightening.

"The Washington Bankers Association says 33,000 homes went into foreclosure in Washington in 2010, and it's going to be just as bad this year," reports KING5. The legislature is considering a Foreclosure Fairness Act, to demand mediation between banks and homeowners. But if the economy doesn't improve, widespread mediation may simply prolong the foreclosure crisis. 

All of these distressed properties act to further depress property values. This First Hill studio caught my eye, 500 square feet in a building that opened in 2002, going for $121,000: "[I]magine an open floor plan, granite tiled entry, slab granite counters, stainless steel backsplash, breakfast bar, & in unit w/d. Modern secure bldg w/workout, media, bus. center, & parking."

This Photoshop job is epic!

HOA dues are just $170. It's a block south of Seattle University, on Jefferson, so a developing neighborhood. It's a HUD sale, being managed by HUD specialists BLB Resources, and the original list price was $135,000. That's a discount of $13,500, and for a while, it's going to affect the sale price of anything in that area.

I think you can see evidence of this in the Case-Schiller tiered index. As Seattle Bubble graphs it out for you, the low tier has fallen nearly 10 percent year-over-year. Seattle home prices in general are "hitting new lows," the Bubble points out, but you'd expect the more economically insecure portion of the market to display the strain of prolonged unemployment most strongly. 

Oh, and one more parting shot from Seattle Bubble: "One in three Seattle-area home listings are distressed."