Thursday, January 18, 2007

Seattle may not be immune

This news from Southern California. (It should be noted that San Diego is one of the largest bubble areas in the U.S.)

“Lenders increased their consumer warnings in the final months of 2006 to Orange County homeowners who fell behind on mortgage payments. They sent 688 notices of default in December, marking the fifth consecutive monthly increase in such notices, DataQuick reported.”
“Foreclosure totals also rose more or less steadily in the second half of 2006. For the full year they totaled 647, more than quadruple the 2005 total.”

The Union Tribune. “Residential foreclosure activity in San Diego County rose sharply in 2006, DataQuick reported. There were 1,612 foreclosures last year, compared with 212 in 2005, a jump of 660 percent. Notices of default, the first stage in the foreclosure process, totaled 8,816 during the year, compared with 3,933 in 2005, an increase of 124 percent, said DataQuick analyst John Karevoll.”

“The county’s housing market ‘is precarious in a way it was not five or 10 years ago,’ Karevoll added. ‘It could get bumped out of whack with much smaller movements in the broader economy. It is very stretched.’”

Other areas won't experience the same market dynamics as the areas mentioned above. However, who can deny that the aggregate effect of the national market following this trend will not eventually spread to the broader economy, then to other less volatile housing markets?

I recently checked out the Seattle Bubble blog http://seattlebubble.blogspot.com/ as I lived there once and have some knowledge of the market there. Many in the 'Emerald City' believe they are not affected by the national housing bubble. They are half right. A strong economy, jobs, and a housing market that didn’t reach the heights of other areas of the country lulled them into a sense of security.

Reality however may not be so kind. Washington Sate does not exist in a vacuum. They not only trade with other states but other countries. A broad based downturn, either national or global is bound to touch their jobs market, economy and housing.

The sentiment that is coming out of Seattle today is similar to what I saw coming out of other cities like Boston a year ago. Boston is not a fair comparison to Seattle, but I’m sure you get my point.

We are not immune to a broad economic downturn!
None of us. As the global economy has flattened this past decade we all will feel the ripple.
Vern

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