Foreclosures hit Northwest homes, business

Mortgage foreclosures in Thurston County increased more than 50 percent in 2008 compared with 2007, an indication the slowing economy is contributing to this growing problem, newly compiled data show.

Notice of trustee's sales filed with the Thurston County Auditor's office rose to 1,010 through Dec. 19, up from 662 in 2007.

The notices do not necessarily mean property in default will result in a foreclosure, but it is a sign the property owners are behind on their mortgage payments and that the lenders have started the foreclosure process. The notices typically identify the borrower, lender, property address, amount of money owed on the property, and a date for a public auction.

New trend

Foreclosures have increased in Thurston County the past few years. When the real estate market was stronger here, the notices dropped to a low of 409 in 2005, the data show. They started to rise as some borrowers began to default on riskier loans, also known as subprime loans.

Today's foreclosures are a combination of some lingering subprime problems, combined with a slower economy, said Mark Steves, president-elect of the Thurston County Realtors Association. Other factors include the inability to refinance because the home has dropped in value or is worth less than the mortgage itself, he said.

Median home values in Thurston County have not dropped sharply but they were 5 percent lower in November 2008 compared with November 2007, according to Northwest Multiple Listing Service data.

Steves, who has worked in real estate for 30 years, is an agent in the Yelm area. In the past few months, he said 40 percent to 50 percent of his business has been fueled by distressed properties — properties already owned by a bank, or in which lender has agreed to sell the house for less than the value of the mortgage, also known as a "short sale."

'Live at the maximum'

Homeowner Bill Coultas of Olympia said his lender has started the foreclosure process on his home, but he is hoping to save his house by hiring an attorney and filing bankruptcy.

Coultas, 56, who works as a commission salesman, sells real estate accessories, such as insulation, garage doors, and gutters to builders and homeowners. As the real estate market cooled, his income fell but his bills did not, he said.

"When times are good, you live at the maximum limit and beyond," Coultas said, adding that he is not proud of his behavior.

He acknowledged that the colder weather is better for insulation sales, but he still is considering a change of occupation.

As for the local real estate market, he doesn't think it has hit bottom yet and won't until the middle of next year. "Next year could be a total washout," Coultas said.

Businesses

Some South Sound businesses also have been ensnared by the foreclosure process.

Major Pierce County home builder SoundBuilt Homes Inc. of Puyallup has 45 undeveloped lots at Horizon Pointe in foreclosure, according to a notice of trustee's sale. The notice shows that 45 lots on Fresco Drive, Breeze Drive and Flute Street have an assessed value of $3.16 million.

A spokesperson for SoundBuilt could not immediately be reached, but Mark Kitabayashi, the listing agent for the lots, said SoundBuilt is restructuring loans with its lender and expects to move forward on the development.

Kitabayashi expects the real estate market to improve next summer and so does Steves, but he also said the current downturn is unusual.

Typically, real estate markets slow when mortgage interest rates are higher, but rates continue to be at historic lows, Steves said. He chalks it up to a lack of confidence about the economy and consumers concerned about job security.

"When buyers come back, we're going to be busy," Steves said.

Rolf Boone is a business reporter for The Olympian. He can be reached at 360-754-5403 or rboone@theolympian.com.