Resales of California Foreclosures Accounted for 43 Percent

by Donald Hanz on Foreclosures

Resales of California foreclosures accounted for 42.6 percent of total home sales in the state in the first quarter, based on sales figures from a real estate information firm.

The first quarter percentage marked a drop from 57.8 percent one year ago, but marked an increase from 40.6 percent in the previous quarter. Resale percentages varied by county significantly, from 14 percent in San Francisco to 68 percent in Merced.

Investors revved up their participation in the California foreclosure market in the first quarter, as almost 25 percent of properties in foreclosure auctions went to investors, a jump from the 17.6-percent share one year earlier.

As the share of foreclosure sales slowed down compared to one year earlier, the pace of pre foreclosures in California also slowed down. A total of 81,054 delinquency notices were filed, down by a staggering 40.2 percent from the 135,431 default notices posted in the first quarter last year.

Similarly, the number of foreclosure homes statewide declined during the quarter to 42,857 units, a drop of 1.7 percent from total foreclosed units one year earlier.

The specific factors for the slowdown in California foreclosures cannot yet be identified by analysts, as they are not certain whether changes in market conditions or changes in government policies and programs are driving the slowdown.

Analysts, however, contended that the worst of the crisis may be over for the most foreclosure-battered counties and cities in California, as the claws of foreclosure are now shifting to wealthier neighborhoods.

In neighborhoods where the home price median is $500,000 or more, the mortgage default rate rose by 1.5 percent in the first quarter compared to the previous period.

In contrast, the delinquency rate in neighborhoods where the median is $500,000 or lower has dropped by a stunning 43 percent from one year earlier and fell by nearly 6 percent from the previous quarter.

Among the regions in the state, Southern California posted the highest number of default notices, with a total of 44,581. Second was Central Valley, with a total of 18,203 notices, and third was the Bay Area, with a total of 13,517 notices.

Among all counties, Los Angeles County posted the highest number of filings, with nearly 7,000 of its homes notified of default during the quarter.

Southern California also topped other regions in number of foreclosure deeds. With a total of 22,373 foreclosed units, the region accounted for 52.2 percent of total California foreclosures during the quarter.