Friday, February 18, 2005

California home foreclosure at a low

San Jose Business Journal

Just over 2,500 homes went into foreclosure in Santa Clara County last year, a 19.4 percent drop from the year before, according to DataQuick Information Systems, a La Jolla-based real estate information company.

Statewide, foreclosure activity dropped to its lowest level in more than 13 years in 2004, the result of robust home sales and strong appreciation rates, DataQuick says.

Lending institutions sent default notices to 56,125 California homeowners last year. That was down 32.9 percent from 83,600 in 2003. Last year's default count was the lowest DataQuick has in its statistics, which go back to 1992. Default activity was strongest in 1996 when 217,410 homeowners found themselves in the foreclosure process.

"There's always a going to certain level of financial distress out there. People lose jobs, get divorced or have costly medical emergencies even in the best of times. Right now, though, because of increasing home values, virtually everyone can sell or refinance if they're really in trouble," says Marshall Prentice, DataQuick president.

"We expect foreclosures to go up this year. It's likely that appreciation rates will come down somewhat. And also, a lot of last year's mortgages were higher-risk loans where default rates will be higher," he says.

The 2,520 foreclosures in Santa Clara County was the largest number for the Bay Area. Other area counties and the number of foreclosures and the percentage difference from 2003 are:

* Alameda: 2,429 (-21.7 percent)
* Contra Costa: 2,183 (-20.8 percent)
* Marin: 248 (-10.5 percent)
* San Mateo: 684 (-26.5 percent)
* San Francisco: 427 (-2-.6 percent).

While all counties in California saw a decrease in foreclosure activity, the decline was strongest in Los Angeles and San Bernardino counties. Mortgage loans are least likely to go into default in San Luis Obispo, Orange and Marin counties. The likelihood is highest in Central Valley counties, DataQuick says.

Only about 10 percent of the homeowners in the default process actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the mortgage off.

While foreclosure properties tugged property values down by almost 10 percent in some areas eight years ago, the effect on today's market is negligible, DataQuick reported.