Pace of Foreclosure Decreases Has Doubled Since Law Took Effect in January
Pace of Home Price Increases Has Also Doubled Since Law Took Effect
IRVINE, Calif. – October 10, 2013 — RealtyTrac® (www.realtytrac.com), the leading online marketplace for comprehensive housing and real estate data, today released its Southern California Foreclosure Market Report™ for September 2013, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 9,242 properties in the six-county Southern California region in September, an increase of 8 percent from the previous month but down 56 percent from September 2012. Statewide, foreclosure filings were reported on 15,804 properties, up 4 percent from August but down 58 percent from September 2012.
“The September foreclosure numbers demonstrate one of two significant trends in Southern California since the implementation of the California Homeowner Bill of Rights (HBR) in January 2013,” said Daren Blomquist, vice president at RealtyTrac. “The first trend is foreclosures decreasing at a faster rate. Starting in March 2009 — when foreclosures in Southern California peaked at more than 63,000 in one month — until December 2012 foreclosure activity in Southern California decreased at a steady pace of 2 percent a month on average. Since HBR took effect the pace has picked up to an average 4 percent monthly decrease in foreclosure activity.
“Secondly, the pace of home appreciation has also doubled since the implementation of HBR,” Blomquist continued. “From May 2009 — when Southern California home prices hit bottom — through December 2012, median home prices on average increased 1 percent a month. Then, after HBR became the law, from January 2013 to September 2013, the pace of home appreciation doubled to 2 percent per month on average. Clearly HBR has accelerated both the pace of home appreciation and foreclosure declines. The danger is that this acceleration will result in an overheated market that stalls when foreclosures delayed by HBR hit down the road.”
The decrease in overall foreclosure activity in the six-county Southern California region in September was driven by a sharp year-over-year drop in Notices of Default (NOD), scheduled foreclosure auctions (NTS) and bank-owned REO activity, all three of which were down by double digits from a year ago. NODs also decreased from the previous month, down 1 percent, but scheduled foreclosure auctions increased 6 percent from the previous month following a 17 percent monthly increase in August, and REOs increased 44 percent from the previous month following a 20 percent monthly increase in August.
“We’re well past the worst of the foreclosure crisis in Southern California, but the rapidly changing laws are making it more difficult to clear out the distressed properties that are still hanging around,” said Rich Cosner, president of Yorba Linda-based real estate brokerage Prudential California Realty. “The irony is that now would be a great time to sell those distressed properties given the low inventory of homes for sale.”
Cosner said that since the HBR was rolled out in January, short sales and foreclosure sales have plummeted sharply statewide in California as lenders and the industry adapt to the new law. He noted that HBR forbids dual tracking, a practice where banks foreclose on a borrower while simultaneously doing a loan modification or other foreclosure alternative. HBR also requires lenders to provide homeowners facing foreclosure with a single point of contact.
RealtyTrac data shows home prices were up dramatically in Southern California in August. The average of median home prices in the six-county region was $376,917, an increase of 26 percent from a year ago — the biggest year-over-year increase in the region’s home prices since December 2004 and the 17th consecutive month with an annual increase.
“The Southern California housing market is improving,” added Cosner, noting the recent home price gains in Southern California. “Sales prices are up, builders are breaking ground on new developments and the number of listings is growing. I’m very optimistic about the local Southern California residential real estate market.”
The RealtyTrac U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing entered into the RealtyTrac database during the month — broken out by type of filing. Some foreclosure filings entered into the database during the month may have been recorded in previous months. Data is collected from more than 2,200 counties nationwide, and those counties account for more than 90 percent of the U.S. population. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee’s Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). The report does not count a property again if it receives the same type of foreclosure filing multiple times within the estimated foreclosure timeframe for the state where the property is located.
The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.
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RealtyTrac (www.realtytrac.com) is the leading supplier of U.S. real estate data, with more than 1.5 million active default, foreclosure auction and bank-owned properties, and more than 1 million active for-sale listings on its website, which also provides essential housing information for more than 100 million homes nationwide. This information includes property characteristics, tax assessor records, bankruptcy status and sales history, along with 20 categories of key housing-related facts provided by RealtyTrac’s wholly-owned subsidiary, Homefacts®. RealtyTrac’s foreclosure reports and other housing data are relied on by the Federal Reserve, U.S. Treasury Department, HUD, numerous state housing and banking departments, investment funds as well as millions of real estate professionals and consumers, to help evaluate housing trends and make informed decisions about real estate.
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