Foreclosures and defaults in San Diego County continued to fall, sinking to seven-year lows in September, DataQuick reported Monday.
The trend line, according to University of San Diego real estate economist Norm Miller, points to normalcy in 2014.
The figures show:
• Foreclosures totaled 146 in September, compared with 148 in August and 497 in September 2012, a 70.6 percent year-over-year decline. The last time the total was lower was in August 2006, at 134.
• Defaults totaled 466 in September, compared with 537 in August and 1,050 in September 2012, a 55.6 percent year-over-year decline. January 2006 had a lower figure of 462.
At the depths of the real estate crash that started in 2007, San Diego saw foreclosures soar to a record 2,004 in July 2008 and defaults to 3,832 in March 2009.
In the last “normal” market in 2000-2001, DataQuick reported monthly mortgage defaults in the 400-550 range and foreclosures in the 20-80 range.
The lows occurred a few years later as prices soared and homeowners refinanced to take advantage of low interest rates. Then when easy credit evaporated, homeowners were stuck with unaffordable mortgages and began falling into default.
Miller said the numbers indicate that some homeowners are still in distress, because they are unable to refinance their mortgages. Their equity still hasn’t risen sufficiently above the outstanding balance to the 20 percent level that banks typically require before agreeing to refinance.
“Keep in mind before we play violins for them, that a lot who are stuck have first and second mortgages,” Miller said. “They pulled all the equity out of their home and are living in homes with no money (invested). ... It’s really the lender who’s getting stuck. They’re the only ones with real money in the deal.”
Miller said the number to watch is the default rate, which is a leading indicator of the health of the lending environment. “If it starts going up, foreclosures will definitely go up,” he said.
However, if current conditions continue with a slow economic recovery and stabilizing house markets, then foreclosures should fall below 100 actions per month.
“It could be as much as a year before we’re at normalcy,” Miller said.
By Roger Showley
