Northern California Foreclosure Update
Homeowners in Northern California’s San Francisco Bay Area fell behind in their mortgage payments during the first three months of 2006 while statewide the number of homeowners in default rose to its highest level in more than two years.
The increase in defaults, which is the first step in the foreclosure process, signals that slower home price growth has been taking its toll on the economy. Homeowners, who are unable to pay their mortgages, now find it harder to sell their homes at a profit and pay off lenders.
Mortgage lenders sent notices of default to 527 homeowners in Santa Clara County during the first three months of that year.
A grand total of 2,583 homeowners in Northern California received notices of default. This figure was up 8.3 percent from the previous year, and up 12.7 percent from the end of 2005.
The rising rates of default seem to be caused by the depreciation of housing prices. When prices are rising, most homeowners who find themselves unable to pay their mortgages have enough equity on their homes to enable them to sell their properties, pay off their loans and avoid foreclosure. When price appreciation begins to slow, as it did in the second half of 2005, foreclosure activity increases.
Due to the fact that market appreciation has been slowing down since the recent housing boom, many homeowners are finding themselves facing foreclosure.
During this past March in Santa Clara County, for example, the median price of a previously owned single-family house was up 11 percent from the median price in March 2005. In fact, it was at a new high-$735,000.
Mortgage defaults in the Bay Area are still low by historical measures, Karevoll said. Based on default data compiled since 1992, he said, it would be normal for about 4,000 owners to receive notices of default each quarter.
Default notices hit a peak in the San Francisco Bay Area during the first quarter of 1996 with 6,830 owners defaulting.
In recent quarters, more than 90 percent of Bay Area homeowners, who had gone into default, have been able to avoid foreclosure either by getting up-to-date on their loan payments, or through selling their homes, Karevoll said.
Lenders foreclosed on only 529 houses in the San Francisco Bay Area homes last year.
Statewide, 18,668 owners received default notices in the first quarter; that this 28.7 percent more than during that same period in 2005.
-John Grady
California is one of the states that suffered more with the foreclosure situation. It’s something that really needs attention from the government
[...] the California foreclosure rate has risen nearly 100% since last year, realtors at the California Realtors Expo [...]