It appears that one of the nation's largest and most
troubled housing markets is getting back to normal. According to data released by DataQuick, Notices
of Default (NoDs), the first step in the foreclosure process, on California
houses and condos fell 22.1 percent in the fourth quarter of 2012 compared to
the third quarter and were down almost 38 percent from the fourth quarter of
homeowners were a median of eight months behind on their payments when the
lender filed the Notice of Default and owed a median $14,364 on a median
The 38,212 NoDs
recorded in the quarter was the lowest since the fourth quarter of 2006, near
the beginning of the foreclosure crisis.
Quarterly filings in the state peaked in the first quarter of 2009 at
DataQuick attributed the decline in early
foreclosure filing to rising home values, an improving economy, and a shift
toward short sales which accounted for an estimated 26 percent of statewide
resale activity in the fourth quarter. The median price paid for a home during the quarter was
$300,000, up 22.4 percent from a year ago and 32.2 percent off the median's
$227,000 bottom in first-quarter 2009.
values increased through most of 2012, and the rate of increase picked up
toward the end of the year. 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. This trend alone suggests we'll see a continued decline in
foreclosure rates this year. Another factor is the foreclosure-avoidance goals
of various settlements between lenders and the government," said John
Walsh, DataQuick president.
filings fell in all home price categories but default rates were higher in
California's most affordable neighborhoods. Zip codes where 2012 median sale prices in the
fourth quarter were below $200,000 collectively saw 5.5 notices filed for every
1,000 homes while the ratio was 3.5 NoDs per 1,000 homes in zip codes with
$200,000 to $800,000 medians and 1.3 per 1,000 where the median is above
$800,000. The same disparity was evident
with foreclosures which declined in frequency as the median price in the zip
resales accounted for 16.6 percent of all California resale activity last
quarter, down from 20.0 percent the prior quarter and 33.6 percent a year ago.
It peaked at 57.8 percent in the first quarter of 2009.
the loans going into default are still from the 2005-2007 period with the
median origination quarter being the third-quarter 2006. That has been the case
for three years, indicating that weak underwriting standards peaked then.
California has been among the hardest hit states in
terms of foreclosures, ranking in the top five in RealtyTrac's accounting of
foreclosure activity nationwide for most of the last six years. While
1.1 million of California's 8.7 million houses and condos have been involved in
a foreclosure proceeding the past five years, 780,000 were actually lost to
foreclosure. The other 320,000 were either sold, or the payments brought