La Jolla, CA.--The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than fifteen years, a real estate information service reported.
Lending institutions sent homeowners 81,550 default notices during the October-to-December period. That was up by 12.4 percent from 72,571 the previous quarter, and up 114.6 percent from 37,994 for fourth-quarter 2006, according to DataQuick Information Systems.
Last quarter's number of defaults was the highest in DataQuick's statistics, which go back to 1992.
But the decline in home prices is good news for renters who want to buy.
"Foreclosure activity is closely tied to a decline in home values. With today's depreciation, an increasing number of homeowners find themselves owing more on a property than it's market value, setting the stage for default if there is mortgage payment shock, a job loss or the owner needs to move," said Marshall Prentice, DataQuick's president.
The median price paid for a California home peaked at $484,000 last March and declined to $402,000 by the end of 2007, although much of that decline was caused by significant shifts in the types of homes that were sold.
Of course, this downturn in real estate will put some prospective home buyers out of a job. But if you can manage to stay employed and even increase your income home owning is becoming more affordable.
The Bay Area has the lowest rate of mortgage defaults. My guess is that Silicon Valley is doing well.
On a loan-by-loan basis, mortgages were least likely to go into default in San Francisco, Marin, and San Mateo counties. The likelihood was highest in Merced, San Joaquin and Stanislaus counties.
Fewer homeowners in default are able to hold on to their property. An estimated 41% of those in default are now able to avoid foreclosure by bringing their payments current, refinancing or selling their home to pay off their loan, DataQuick reported. A year ago, 71% of homeowners in default were able to recover.
Actual foreclosures statewide rose fivefold in the quarter, to 31,676, DataQuick said.
That's only about an eighth of a million households per year evicted from their mortgaged homes in a state with 12 million households total. So that works out to about 1% of the population. Then there's a separate group who are evicted for inability to pay rent. But they attract far less attention and sympathy.
|Share |||By Randall Parker at 2008 January 22 08:27 PM Economics Housing|