Posted on July - 15 - 2010
Better News for California in June
Further good news for embattled households in California is that foreclosures in the Southwest and Riverside Counties, and San Diego too, were down in June 2010 to levels not seen since 2008 when the State imposed a moratorium. Short sales and other federal programs appear to be finally kicking in. Latest statistics confirm a slow-down in default notices and less foreclosures too. Local realtors ascribe the development to an increase in short sale approvals (short sales are where homes are sold for less than the outstanding balance on the mortgage, with the lender forgiving the difference).
In North County, California, default notices for June 2010 were at a rate of 0.2% – 8% better than May 2010, and 54% less year-on-year. This is the lowest rate for North County since the Fall of 2008, when the State announced a foreclosure holiday. The picture at the back-end of the foreclosure cycle was also better in North County. Total sales and repossessions for June 2010 were just 0.32%. – that represents a fall of 32% from May 2010 and a 73% annual drop as well.
Southwest County, California also fared better overall. While default notices at 0.63% were up 11% from May 2010, this is still 50% better year-on-year, and 87% down from the March 2009 peak. June 2010 foreclosures were down 72% from the previous June, and the best rate recorded since October 2006.
A significant number of San Diego realtors believe that the lower rate of foreclosures is a consequence of increased short sales – in their County the more than 3,100 short sales during the first half of the current year were three times the volume of those in the corresponding months of 2009.
Other observers pay credit to other initiatives as well, pointing out that lower monthly payment solutions thanks to mortgage modifications were also helping stem the tide. The modification program is working, a local property market statistician told me, and that is the right way to interpret the trends. I do not take the argument seriously that big banks are holding back. Why should they?
Other people that I spoke to were more inclined to believe the latter. If banks are holding back and waiting for prices to improve, then perhaps their strategy is working – the median price for a house in North County went up by 15.7% year-on-year in June, while in Riverside County the improvement was near to 14%.
It would be nice if one could argue that the foreclosure crisis is over. Unfortunately, though, for that to happen, America will have to wait for the employment market to turn as well.
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