The consistent drop in the number of people losing their homes to bank repossessions appears to be a product of an economy on the mend, increasing home values and government-led deals with major banks that promise borrowers alternatives to foreclosure, DataQuick officials said.
December foreclosures plummeted to 355, the lowest level since December 2006, when 288 were recorded. December’s total is nearly 18 percent lower than November’s and half of the December 2011 numbers.
Default notices, the first official filing in the foreclosure process, totaled 878. That’s up 7.2 percent from November but down nearly 30 percent from the same month a year ago.
Why is this happening?
“Home values increased through most of 2012, and the rate of increase picked up toward the end of the year,” DataQuick President John Walsh said in this week’s report, referring to California as a whole.
“That means fewer and fewer homeowners are underwater, where they owe more than their homes are worth.
“That in turn means they can sell and pay off the mortgage, or perhaps refinance at today’s low interest rates,” Walsh added. “This trend alone suggests we’ll see a continued decline in foreclosure rates this year.”
Both foreclosure and mortgage defaults in San Diego County showed drastic fluctuations between about 2007 and 2011. But 2012 marked consistent decreases in both categories and are far off their peaks.
The county’s foreclosure level is now 82 percent below the all-time high of 2004, logged in July 2008.
With mortgage defaults, the county is 77 percent below the peak of 3,832, which was recorded in March 2009.
There are several factors that have helped push down the county’s amount of housing distress.
The first one is home-price dynamics. They’ve stayed flat or gone up during the past 11 months and rose 20 percent from start to finish in 2012. Active home listings have fallen to at least a three-year low, causing would-be buyers in certain hot spots to compete for limited supply.
Another continued theme in the distressed-market story is the rise of short sales, which overtook foreclosure resales in market share in 2012, marking a pivotal moment in the local housing market.
Nearly 30 percent of home transactions in December were short sales, near the all-time high of 31.2 percent set in January 2012, DataQuick numbers show. Short sales let struggling homeowners sell their properties for less than what they still owe with lender approval.
Let’s not forget settlements between major banks and federal regulators.
A $25 billion deal was entered in the spring that settled long-standing accusations of mortgage abuses against five companies: Bank of America, Citi, Wells Fargo, Chase and Ally. The banks promised to provide relief to troubled borrowers.
About two-thirds of that help arrived to state borrowers in the form of short sales, according to a report from a watchdog appointed to oversee the terms and progress of the deal.
Written by,
Lily Leung
