A Seattle City Council committee heard this past week that more than one in three Seattle homes with outstanding mortgages is underwater — a rate far above the national average.
That was the statistic City Councilmember Nick Licata highlighted from a city-commissioned report delivered last week by Cornell University law professor Robert Hockett, who recommends cities force lenders to reduce the principal owed on loans.
Problem is, the 1-in-3 statistic is seriously outdated and doesn’t represent Seattle proper. Taken from Seattle-based Zillow, it applied to the fourth quarter of 2012 and covered a broad metro area that includes hard-hit Pierce and Snohomish counties.
A more precise and current figure for the city of Seattle is 1 in 6, according to Zillow.
- Richard Sherman asks for Tyler Lockett-Mario Kart mashup, the internet answers
- Seahawks trade Kevin Norwood, make other moves to get roster to 75
- The Californians keep coming, but King County gives back
- The latest on Seahawks safety Kam Chancellor's holdout
- 2 people killed in Seattle-area windstorm identified
Most Read Stories
Since last year, strong appreciation has lifted many homeowners out of negative equity, or owing more than their house’s value. That trend is expected to continue through next year.
Zillow’s latest estimate, for the second quarter of this year, is that 28 percent of mortgaged homes in the broader Seattle metro area were underwater.
Even that latest estimate is higher than the rates published by two California-based data providers: RealtyTrac says about one-fifth of Seattle metro area homes with mortgages are underwater by more than 25 percent. CoreLogic estimates about 8 percent.
CoreLogic doesn’t include Pierce County, where it says about 20 percent of mortgages are underwater.
Licata’s housing committee plans to ask the city attorney, among others, whether Seattle should do more to push noteholders to reduce loan principal for underwater borrowers.
Ultimately, policymakers are focused on reducing the impact of foreclosures on families and neighborhoods — but negative equity by itself isn’t the best gauge of that risk.
As Svenja Gudell, Zillow’s director of economics research, points out in a recent report, most underwater homeowners continue to make mortgage payments and will not end up in default.
Reset Seattle, a coalition that includes Washington Community Action Network, United Black Clergy and unions, touted the 1-in-3 statistic too in a report last spring, as part of a campaign to push for principal reduction for struggling families.
But in Seattle, the two ZIP codes with the highest percentage of underwater homeowners who owe more than twice the value of their homes — arguably the group at highest risk of defaulting — are 98121 and 98101, according to Zillow’s data.
Those are condo owners in Belltown and downtown Seattle. It’s not the demographic Reset Seattle activists say they represent, but that’s who’s in the deepest as of now.
— Sanjay Bhatt: email@example.com
Boeing stock beats record
This past week Boeing’s share price hit an all-time closing high of $111.33, topping the previous 2007 peak of $107.23 that came soon after the first 787 Dreamliner rolled out.
That first plane was presented to the world with pomp and ceremony in Everett on July 8 (7/8/07), and the stock hit its high 17 days later when Boeing announced blockbuster quarterly earnings of just over $1 billion.
This time the stock is lifted by the continuing boom in the aviation industry and a market perception that Boeing is well positioned against rival Airbus in the battle for big widebody jet sales.
But let’s hope that this time around the stock value is more rooted in reality.
Within 19 months of the 2007 high, the share price had collapsed to a low of $29.36, losing more than 70 percent of its value.
The first glimmer of trouble came the very day of the 2007 peak, July 25, when Boeing Chief Executive Jim McNerney discussed the buoyant earnings but admitted that the Dreamliner’s first flight would slip a few weeks. Eventually, the 787’s first flight was delayed 16 months and after further troubles entered service more than three years late.
As the broader stock market recovered incrementally from the worldwide financial crisis, and Boeing delivered the first 787 in September 2011, the jet-maker’s stock slowly rose again but got stuck at around $70.
Then late last fall it began a steady climb that turned into a dramatic recovery. The booming aviation industry looked like a good investment as other economic sectors remained stagnant.
The stock stalled only momentarily when two incidents of overheated batteries grounded all 787s around the world, and it continued a steady rise as the plane returned to service. Boeing remains on track to deliver 60 by year end, as promised in January.
The market now seems convinced that not only will the 787 become a success, but that Boeing has a shot at dominating the lucrative widebody-jet sector against Airbus.
Boeing this summer rolled out the first model of the larger 787-9 Dreamliner. It may have its first flight as early as this coming week. At the Paris Air Show in June, it launched an even bigger model, the 787-10.
In November, Boeing is expected to launch another new widebody, the 777X, which could also be a big seller.
Boeing insists, contrary to some gloomier industry experts, that the aviation boom will hold up indefinitely as the world’s emerging markets continue to buy jets.
That conviction, plus optimism that the 787 will finally get past its introductory troubles, has sent the stock skyward again.
— Dominic Gates: firstname.lastname@example.org