DQNews Archived Article

California Foreclosures Down

by Real Estate Analyst John Karevoll
June, 1998

La Jolla, CA.— Foreclosure activity in California continued to decline in May as home sales and prices continued to increase, a real estate information service reported.

Lenders started foreclosure proceedings on 9,117 residential properties in May. That was down 20.1 percent from 11,410 in April and down 19.5 percent from 11,321 for May last year, according to DataQuick's Products Division.

The May number was below ten thousand for the second time in three years. The all-time peak was reached in March 1996 when 15,475 homes went into foreclosure. Foreclosure activity in California has generally been in decline the last eighteen months, although the number has gone up several times when lender policies have been tightened.

"Foreclosure activity is still a lagging indicator, we're looking at residual financial distress from the mid 1990s. We expect the number to level off at around five thousand a month by the end of the year," said Mike Ela, DataQuick president.

The decline in foreclosure activity was strongest in the Bay Area. Foreclosure proceedings are most likely to start in situations where homeowners owe more on their homes than the homes are worth. Home values in the Bay Area have been going up for two years and are currently increasing at a ten percent annualized rate.

Foreclosure activity is declining in Southern California where price increases are relatively recent. Foreclosure activity is flat in the Central Valley, where home prices have not have not started to come back yet.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

While foreclosure activity is declining in California, current levels are higher than expected. Contributing factors are changing attitudes towards foreclosure, and the rise in recent years of so-called "sub-prime" lending activity, DataQuick reported.

The negative impact of foreclosure activity on sales prices has declined. While foreclosure homes tugged sales prices down by more than ten percent two years ago, the drag is currently less than five percent, and is isolated to just a few local markets, DataQuick reported.

Source: DataQuick Information Systems

Media Inquiries: John Karevoll (909)867-9534

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