Higher California home prices stem foreclosure tide; San Francisco, San Mateo, Santa Clara counties lead pack

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DQNEWS – Three and a half years after peaking, the number of California homes entering the foreclosure process fell last quarter to the lowest level since the early stages of the housing bust.

Mortgage default filings hit their lowest point since first-quarter 2007, due in large part to a stronger economy and housing market and more short sales.

A total of 49,026 Notices of Default (NoD) were recorded on residential properties during the third quarter. That was down 10.2 percent from 54,615 for the prior three months, and down 31.2 percent from 71,275 in third-quarter 2011, according to San Diego-based DataQuick.

Last quarter’s number was the lowest since 46,760 NoDs were recorded in first-quarter 2007. NoDs peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992.

“A foreclosure happens when a homeowner owes more on the property than the property’s worth. Otherwise it could be sold and the mortgage paid off. So foreclosures go up when home values go down. Prices in most areas today are up significantly from their low point in early 2009,” said John Walsh, DataQuick president.

“Additionally, during the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress. That may change after New Year’s because the temporary ‘debt forgiveness’ feature in the tax code is set to expire as part of the so-called ‘fiscal cliff’,” he said.

Home price impact

California’s median price for existing, single-family detached homes came in at $345,000 in September, up 19.5 percent from a revised $288,700 recorded in September 2011, marking the seventh consecutive month of both month-to-month and year-to-year price increases, according to the California Association of Realtors (CAR).

Of the state’s larger counties, mortgages were least likely to go into default in San Francisco, San Mateo and Santa Clara counties. The probability was highest in Madera, Riverside and Yuba counties.

In September, year-over-year single family home prices were up 21 percent in San Mateo County, up 15 percent in Santa Clara, according to MLS Listings Inc. In San Francisco, prices rose 10 percent during the same period, according to CAR.

Short sales made up an estimated 26.0 percent of statewide resale activity last quarter. That was up from an estimated 24.0 percent the prior quarter and up from 22.9 percent of all resales a year earlier. The estimated number of short sales last quarter rose 19.0 percent from a year earlier.

Foreclosure resales accounted for 20.0 percent of all California resale activity last quarter, down from a revised 27.8 percent the prior quarter and 34.2 percent a year ago. The figure peaked at 57.8 percent in the first quarter of 2009. The level of foreclosure resales – homes foreclosed on in the prior 12 months – varied significantly by county last quarter, from 5.5 percent in San Francisco County to 35.5 percent in Sutter County.

While 1.48 million of California’s roughly 8.71 million houses and condos have been involved in a foreclosure proceeding the past five years, 847,067 have gone through the whole foreclosure process. The other 633,000 were either sold, or the payments were brought current.

At formal foreclosure auctions held statewide last quarter, an estimated 39.4 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 31.0 percent a year earlier, DataQuick reported.

DeadlineNews.Com contributed to this story.

Source: “California Foreclosure Activity Lowest Since Early 2007″

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