Foreclosures in San Mateo County in the San Francisco Bay area of California were down last month by 25% year-on-year, perhaps indicating that the storm has passed and that the sun will soon shine again on battered residents.
April just passed was the fifth month in a row that default notices also have declined – just 327 were filed in San Mateo in April 2010 (which is 18% down from the previous month). According to several well-positioned housing experts, the drivers for these encouraging trends are improving prices in some neighborhoods combined with short sales and successful mortgage modifications.
The situation is much better in Santa Clara County too, and elsewhere across the Golden State. Santa Clara saw 32% less default notices issued in April year-on-year, and that figure of 923 was 15% down on March 2010 as well. Statewide, the picture was the same – the 27,832 defaults served were 16% fewer than March, and 41% lower year on year. Given that default notices are the pre-cursors to foreclosure actions against borrowers who fall 90 days or more behind, this major shift is arguably indicative of better things to come for California.
Chief Economist for Comerica Bank agrees. “We’ve seen a variety of reports about California housing in recent months, all pretty much saying the same thing, that the market is stronger and foreclosures are falling,” he told me. “California is a great illustration of the price dynamic, in that if prices start rising, people think prices are going to continue to rise, and people are going to make every effort to hold onto an asset that is gaining in value.”
While many Californian homes may continue to drop in value as the money struggles to flow back and unemployment staggers, average prices in lower priced areas have shown improvements as first time buyers and investors decide to buy before an upward spike occurs.
Another reason for the upward average trend could also be the increased sales of more expensive homes resulting from the tidal wave now lapping further up the hill. By way of an example, the median price paid for a single-family San Mateo home is now almost $700,000, up by 27%. Another, independent report states that housing prices have bottomed out in Santa Clara, and have been gradually firming for the past 10 months.
While some may think that the trend is simply the effect of more borrowers paying while they wait for the value of their homes to improve, California Mortgage Bankers Association spokesman Dustin Hobbs attributes the movement to increased short sales, noting further that pressure from Obama has loosened the log jams and speeded up the process.
Notwithstanding the above, around 4,800 family dwelling places in Santa Clara, and another almost 1,600 in San Mateo are still going through foreclosure. Kevin Stein of California Reinvestment Coalition says that, “The counseling agencies we work with report they are busier than ever, so on the ground it doesn’t feel like things are improving [yet].”
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