Foreclosure rate for California homes eases
SAN DIEGO (AP) — Home foreclosure activity in California has fallen to five-year lows, easing concerns there might be a flood of distressed sales to slow or even reverse the housing market's recovery.
There were 54,615 default notices filed on houses and condominiums from April through June, down 3.6 percent from 56,633 during the second quarter of last year, according to research firm DataQuick. It was the lowest tally since the second quarter of 2007 and down 60 percent from the peak of 135,431 in the first quarter of 2009.
An improved housing market and a "burning off" of loans from the peak of the housing bubble between 2005 and 2007 has contributed to the drop, DataQuick said. Also, more homeowners with troubled mortgages are turning to "short sales" — transactions in which the sales price is below the amount owed on the property.
The numbers provide more evidence that California's housing market is on the mend even as doubts persist that foreclosures may rise again.
"The big caveat is there are still a lot of people in trouble and it's not clear how many will be foreclosed upon," DataQuick analyst Andrew LePage said Tuesday.
Foreclosures may spike for six to nine months if lenders got "really aggressive about flushing all the distress through the system," LePage said.
Eric Sussman, an accounting and real estate lecturer at University of California, Los Angeles' Anderson School of Management, said banks were unlikely to unleash a new wave of foreclosures, partly because they would face political backlash in an election year.
In foreclosure-battered inland stretches of Southern California, the governments of San Bernardino County and two of its cities are considering a plan to condemn properties with troubled mortgages, which would prevent banks from forcing defaults.
Buyers are finding slim pickings throughout California, leading many analysts to believe California can absorb an uptick in foreclosures.
The California Association of Realtors' index of unsold inventory stood at 3 1/2 months in June, down from 5.1 months a year earlier. The figure represents how long it would take to sell all existing single-family homes at the current sales clip. Supply in a normal market is considered to be six to seven months.