The latest data suggests that foreclosure starts in California decreased in the fourth quarter to the lowest levels seen in 8 years, returning to pre-recession levels.
According to the firm DataQuick, which provide analytics on the real-estate market, Notices of Default have decreased by 10.8 percent from the third to fourth quarter of last year. Of the 18,120 Notices of Default filed in the last quarter of 2013, 17,773 of the homes filed notices due to default on multiple loans.
DataQuick claims that levels have not been this low since the fourth quarter of 2005, in which 15,337 Notices of Default were recorded.
While acknowledging the role of several foreclosure prevention efforts, such as short sales and loan modifications, in helping reduce the number of foreclosure start, John Walsh, president of DataQuick, attributes most of the recovery to an improving economy and the price appreciation of homes.
“Fewer people are behind on their mortgages,” Walsh says. “Those who do get into trouble, many, if not most, can sell and pay off what they owe. Also, those who are underwater and close to slipping into foreclosure are far less likely to give up their homes now that appreciation has returned to the housing market. There’s a strong incentive to hang on.”
Californians paid a median price of $364,000 in the fourth quarter of last year. This is up 22.1 percent from the same time in 2012. On a year-over-year basis, the median price of homes in California has increased by 20 percent over the last five years.
DataQuick reported that the median origination quarter for mortgages on which Notices of Defaults were eventually filed continues to be the third quarter of 2006, which has been the case for over four years now.
Of those homes for which Notices of Default were filed for the fourth quarter, the median number of months behind in payments on senior liens was 8.7 months. The median mortgage size for homes on which notices of default were filed was $302,000, and the median amount of equity the owners of those homes had was $20,066.
DataQuick also reported that Notices of Default were filed on home equity loans and lines of credit that had a median past due of $5,491 on a median credit line of $68,770. Information was not available on the balance of those credit lines.
As for completed foreclosures, data from the fourth quarter of 2013 indicated a slight increase of 2.2 percent from the third quarter, from 8,030 to 8,205. Both quarters, however, represent a marked decrease in the number of foreclosures over the last seven years, standing as the lowest and second lowest levels over that time period. On a year-over-year basis, foreclosures in the fourth quarter decrease by 61.2 percent for the same time in 2012.
It took an average of 9.0 months for the foreclosure process to be completed from the time of the Notice of Default. From the third to fourth quarter of last year, the share of resale activity that foreclosures and short sales accounted for fell by 7.7 percent and 13.5 percent, respectively. Over the last quarter of 2013, sales of foreclosed homes within the last 12 months accounted for 6.7 percent of resale activity. Short sales accounted for 12.5 percent. This is a significant decrease from 2012, when their share accounted for nearly half, respectively of all resale activity (estimated).
Over the last quarter, foreclosures and Notices of Default stayed focused more affordable zip codes with a median price of $200,000.
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