California Foreclosures Jump Six Times High

Posted in Foreclosures, October 29th, 2007 |

In September this year California foreclosure filings rose by six times compared to the same month in 2006. This has had a negative effect on the general economy in California. The number of foreclosed houses is high and there are relatively few buyers. This is causing real estate prices to fall drastically. Once the average price of a house in California was $593,000.

In San Diego there were 2,734 filings last month although it did not top the list in the State. The top ranking cities tagged with foreclosure stigma were San Diego, Chula Vista, Oceanside, Escondido, El Cajon, Spring Valley, San Marcos and Vista.
A brokerage firm reported that the rate of vacancy is at an all time low at 2.71% in San Diego. It is down by 2.87% from what it was during the same time (3rd quarter) in 2006. North County and South corridor sub-markets had the lowest vacancy rate with 1.4% and 2.2% respectively. The national vacancy rates are about 7%.

There is pressure for retail space because of fall in supply in San Diego County. Lease rates are going up. In the second quarter it has gone up by 1% in comparison to the same period in the previous year. The prediction is that this upward trend will continue with an increase ranging from 5% to 7% during this year.
In San Diego about 727,000 square feet of development is under way incorporating 3.7 million square feet for retail space. In 9000 buildings there is currently about 130 million square feet of retail space. The R&D vacancy rates are 11.6% during the third quarter. During 2006 in the second quarter it was 11.2% and 10.8% in the third. The central suburban market (Kearney Mesa, Mission Gorge, Moreno and Sport Arena localities of the city) has a low vacancy rate of 4.6%.

Analysts opine that absorption rates are down while lease rates up for R&D estates. Rental rates are also expected to rise this year.

Thus from whatever angle one looks at the problem this foreclosure crisis is not contained within a limited economic zone or locality but is spilling out and spreading to all sections of the nation and even touching international markets. There is high demand for rented houses while thousands of oreclosed units are lying vacant – deserted, gloomy and menacing for the entire neighbourhood. This is the paradox.