California Foreclosures Down

August 1, 2003

La Jolla, CA.--The number of California homes going into foreclosure dropped significantly during the second quarter of this year, the result of strong appreciation and robust sales activity.

Lending institutions started foreclosure proceedings on 15,323 homeowners during the April-to-June period. That was down 23.5 percent from 20,035 for the prior three months and down 15.7 percent from 18,179 for last year's second quarter, according to DataQuick Information Systems.

Last quarter's number was the lowest DataQuick has in its default statistics, which go back to 1992. Default activity peaked in first-quarter 1996 when 44,665 homes went into foreclosure. The numbers count recorded Notices of Default, the first step of the formal foreclosure process.

"This is probably as low as we'll get in the current cycle. We expect appreciation rates to ease back between now and the end of the year. That means it could become a little harder for some financially troubled homeowners to sell and pay their mortgage off," said Marshall Prentice, DataQuick president.

The median price paid for a California home was $302,000 last quarter, up 14.1 percent from $265,000 a year ago.

Bay Area foreclosure activity increased slightly from year-ago levels. A total of 2,980 defaults were recorded, up 4.5 percent from 2,853 a year ago. Bay Area home values went up at a 6-7 percent annual rate. Southern California defaults totaled 7,983, down 24.0 percent from 10,501 a year ago. Home values increased at a 15 percent rate in that region.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

More than eighty percent of the homeowners who found themselves in default were able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the mortgage off. In the mid 1990s only half of all distressed homeowners were able to do that.

While foreclosure properties tugged property values down almost ten percent in some areas seven years ago, the effect on today's market is negligible, DataQuick reported.

In addition to the decline in foreclosures, there is unremarkable activity among other market stress indicators including loan-to-value ratios, seller financing and other unconventional financing usage, shifts in market mix, turnover rates and non-owner occupancy rates, DataQuick reported.

Tulare, Madera and Fresno counties had the highest relative foreclosure rates, while Marin and Napa counties had the lowest, DataQuick reported.

Notices of Default
recorded on residential property

County	2Q2002	2Q2003	%Chg
Los Angeles	5,370	3,920	-27.0%
Orange County	862	624	-27.6%
San Diego	865	704	-18.5%
Riverside	1,441	1,155	-19.8%
San Bernardino	1,642	1,314	-20.0%
Ventura	322	266	-17.3%
SoCal Total	10,501	7,983	-24.0%
San Francisco	124	148	19.7%
Alameda	744	746	0.3%
Contra Costa	615	598	-2.7%
Santa Clara	632	719	13.8%
San Mateo	190	228	20.4%
Marin	90	49	-45.7%
Solano	262	303	15.9%
Sonoma	150	172	14.9%
Napa	49	18	-63.6%
Bay Area Total	2,853	2,980	4.5%
Santa Cruz	79	66	-15.9%
Santa Barbara	145	119	-18.3%
San Luis Obispo	67	60	-10.7%
Monterey	102	98	-3.6%
Coast Total	392	342	-12.7%
Sacramento	961	877	-8.7%
San Joaquin	602	625	3.9%
Placer	171	143	-16.4%
Kern	611	496	-18.7%
Fresno	808	631	-21.9%
Madera	138	96	-30.8%
Merced	146	133	-8.9%
Tulare	458	483	5.6%
Yolo	72	61	-15.4%
El Dorado	89	83	-7.3%
Stanislaus	377	388	3.0%
Inland Total	4,433	4,017	-9.4%
All California	18,179	15,323	-15.7%

Source: DataQuick Information Systems

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