As an appraiser in Bakersfield, the rate of foreclosures is an important statistic to watch for our market conditions. Again, for the purposes of this post, foreclosures are considered to be those properties where a Trustee's Deed has been recorded, indicating that the lender has taken possession of the property. In November we posted that the rate of foreclosures in Kern County, CA was on the decline. Well, the decline came to a soft stop.
The foreclosure rate inched up in November to 550 from 520 foreclosures in October. Not too bad. Well below the high of 1,000 in August. However, the increase continued in December pushing foreclosures to 663 for the month. This rate really needs to continue to decline to relieve the downward pressure on home prices in Bakersfield and Kern County. However, as noted in the prior post, there were a record number of rate resets in October and November, so this rate may continue to climb in the foreseeable future.
The year ended with a record number of foreclosures, certainly the highest in the past 13 years: 8,560. The next highest year was 2007 with 3,007 foreclosures, a rate less than half of last year. Between 1995 and 2004 the average yearly rate was 1,930. With a rate 4.45 times the annual average, it's no wonder that Bakersfield ended up in one of the top ten cities for home price declines in the country.
Watching this rate in the first quarter of 2009 will be very important. Home prices are at levels that are much more affordable now in Kern County. If foreclosures continue at rates similar to 2008, prices will drop back down to levels similar to the late-90's and early-00's when per square foot prices hovered in the $70 range for 8 years.
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