California: Foreclosure Starts Lowest Since 2006

January 23, 2013

La Jolla, CA.--The number of California homeowners pushed into the foreclosure process fell last quarter to the lowest level in six years, the result of rising home values, an improving economy and a shift toward short sales, a real estate information service reported.

During fourth-quarter 2012 lenders recorded a total of 38,212 Notices of Default (NoDs) on California houses and condos. That was down 22.1 percent from 49,026 during the prior three months, and down 37.9 percent from 61,517 in fourth-quarter 2011, according to San Diego-based DataQuick.

Last quarter's number was the lowest since 37,994 NoDs were recorded in fourth-quarter 2006. New foreclosure filings (NoDs) peaked in first-quarter 2009 at 135,431. DataQuick's NoD statistics go back to 1992.

"Home values increased through most of 2012, and the rate of increase picked up toward the end of the year. That means fewer and fewer homeowners are underwater, where they owe more than their homes are worth. That in turn means they can sell and pay off the mortgage, or perhaps refinance at today's low interest rates. This trend alone suggests we'll see a continued decline in foreclosure rates this year. Another factor is the foreclosure-avoidance goals of various settlements between lenders and the government," said John Walsh, DataQuick president.

Foreclosure resales accounted for 16.6 percent of all California resale activity last quarter, down from 20.0 percent the prior quarter and 33.6 percent a year ago. It peaked at 57.8 percent in the first quarter of 2009. Foreclosure resales - properties foreclosed on in the prior 12 months - varied significantly by county last quarter, from 5.0 percent in San Francisco County to 31.4 percent in Sutter County.

Just as with mortgage default filings, foreclosures remained far more concentrated in the state's most affordable communities. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 4.3 homes foreclosed on for every 1,000 homes in existence. That compares with 2.0 foreclosures per 1,000 homes for zip codes with medians from $200,000 to $800,000, and 0.5 foreclosure per 1,000 homes in the group of zips with medians over $800,000.

At formal foreclosure auctions held statewide last quarter, an estimated 42.0 percent of the foreclosed properties were bought by investors or others who don't appear to be lender or government entities. That was up from an estimated 39.2 percent the previous quarter and up from 31.2 percent a year earlier, DataQuick reported.

Notices of Default (Trustees Deeds further down)
houses and condos

 includes additional counties

Source: DataQuick; DQNews.com

Media calls: Andrew LePage (916) 456-7157

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