Foreclosures hit new highs
By: ZACH FOX - Staff Writer
Credit crunch starts showing up in the numbers | ∞
December foreclosure sales in San Diego County quadrupled year over year, and statewide, sales of new homes in November dropped 55 percent from the previous year, according to three reports released Tuesday that analysts said indicate the state's housing recession will continue to worsen before it recovers.
The number of foreclosures sold in the county during December leapt 328 percent from the previous year to 1,096, comprising 45 percent of all sales, according to data from a report by ForeclosureRadar, a company that follows California foreclosures.
Until that percentage drops, the housing market will not recover, said Norm Miller, a real estate professor with the University of San Diego.
"That's very, very high compared to historical numbers. We should be down to 5 percent, or even 1 or 2 percent," Miller said. "Even if you saw them go down 10 to 15 percent, that wouldn't be enough. So as far as turning the corner? No, definitely not yet."
Another report released Tuesday reported similar market softness, as sales of new homes throughout California in November tumbled 55 percent year over year, to 2,968, according to Hanley Wood Market Intelligence, a research firm based in Costa Mesa.
Miller and others who study the real estate market said that the market provides some prime opportunities for buyers to find discounts on homes and condominiums.
They could be aided by foreclosure sales increasing before they stabilize, mainly because housing is just beginning to feel the hit from when banks first tightened lending standards in August, said Sean O'Toole, founder of ForeclosureRadar.
Foreclosed property valued at about $5 billion sold at auctions statewide in December. So far, about $3.5 billion has moved in January, O'Toole said.
"It's never been this high. We already surpassed all records by the third quarter of last year," O'Toole said. "And we've really been on a tear in the beginning of January."
Total home sales in San Diego County dropped 35 percent, to 2,468 during December, according to data from another report by DataQuick released Tuesday.
Riverside County dived 45 percent year over year, to 2,503 in December, according to DataQuick.
For prospective homeowners waiting for prices to hit their lowest points, analysts said the housing market on the whole will continue to decline for several months, at least, but buyers should search out deals and take advantage of the right home at the right price.
"You could do fine anytime in 2008 or 2009," Miller said. "If you really want to (wait for the lowest point), you'd wait and not buy until we've turned the corner, but that's hard to do," said Miller, adding that buyers can find great deals on condominiums since some companies are facing bankruptcy.
"If I was looking for a condo, I would look soon. But if I was looking for a single-family home, I would wait."
Falling interest rates may also play into the hands of those looking for a deal on a home. Freddie Mac, a government-chartered mortgage company, said in its weekly report last Thursday that 30-year, fixed-rate mortgages averaged 5.87 percent, its lowest level in two years.
ForeclosureRadar reported that foreclosure rates for both counties jumped from the previous year, pegging San Diego with the 16th-highest foreclosure rate in the state, while Riverside County catapulted to earn the dubious distinction of holding the state's highest foreclosure rate, based on population. San Diego and Riverside ranked 27th and sixth during November, respectively.
Riverside averaged one foreclosure sale for every 1,000 people, a 547 percent year-over-year increase, and San Diego came in at about 1 per 2,800 people, a 38 percent leap in just one month, according to ForeclosureRadar.
California's lowest foreclosure rate was almost 50 times below Riverside County's. ForeclosureRadar reported Humboldt County, in the northern extreme of the state, had just three foreclosure sales in December, or one for every 44,175 people.
In addition to continued impact from last fall's disappearance of many loan programs, rate increases on adjustable-rate mortgages will be another foreclosure contributor in 2008, O'Toole said.
Those rate changes could shift the demographics of foreclosed homes, said Nathan Moeder, a principal with The London Group, a San Diego-based realty consulting firm.
Subprime loans ripped apart lower-end neighborhoods while the adjusting interest rates will probably hit higher-end homes as well, he said.
While that will contribute to foreclosures, Moeder said he thinks the effective rate will be significantly lower than from defaults on subprime loans because these homeowners typically have the means to survive payment increases.
"If they have to scrape together an extra $1,000 a month, they'll have to make sacrifices," Moeder said. "But these are not the type of people that hand the keys to the bank and say they're done."
-- Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.
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economic house of cards wrote on Jan 15, 2008 11:35 PM:Yeah, and just wait until the recession really kicks in and people start losing their jobs...then a whole new cycle of forclosures will add to the subprime forclosures. Credit card and auto loan late payments are skyrocketing too and homeowners can't refinance their way out anymore. The wolf is at the door and there's nowhere to run.
Don't Worry Be Happy... wrote on Jan 16, 2008 1:12 AM:With every up, there's a down; and with every down, there's an up. History repeats itself and will do so again.
Thankful wrote on Jan 16, 2008 2:47 AM:My husband and I were very fortunate to have successfully sold our older home in North San Diego County, in the fall of 2006. Now we are living in another state and are doing better than ever! Thank God, our former home did not foreclose. Face it, California has just gotten too darn expensive for just about anyone to afford a home there, unless you are rich and famous.....
Part of the Cycle wrote on Jan 16, 2008 5:09 AM:We reached ridiculous highs. Now, here come the lows. People are going to just walk from there houses when they realize that they are worth hundreds of thousands less than what they paid for them. The banks will have no choice than to lower the balance. This will only be enabled by a government bailout. It is going to be painful but it is all part of getting housing prices back to realistic levels.
Fred H wrote on Jan 16, 2008 7:45 AM:And who would have ever thought that loaning large sums of money to people with lousy credit might lead to this.....Jeepers!
Patrick wrote on Jan 16, 2008 7:49 AM:The crazy days are over! All of you maxed out and driving around your huge SUV's and on your fifth refi, gas at $100 a barrel, gold at almost $1000, US dollar deflating faster than a whoopee cushion, impending war with Iran... your homes are gong to be worth what they were in 1994 in a couple years. Thank you GWB!
Olaf wrote on Jan 16, 2008 8:46 AM:Why is it always GWB's fault??? Did everyone blame Clinton for everything? I am ashamed of what our political whacko's have done to our system. dividing it up and making everybody hate each other... find solutions instead of critizing. The fall of the housiong markets are from all the greedy developers and real estate morons FLIPPING homes and making money out of a basic need for most of us. Look at what Thankful wrote: glad she got out of the market at the high point and fled the state... so you ar thankful you timed it right? NIce.
yep wrote on Jan 16, 2008 9:01 AM:Republicans are looking for someone to blame on their incompetence and this time it's the illegal immigrants. Kind of like what the Nazis did in the late '30s when the German economy was in the toilet, they targeted the Jews for all their problems.
NC Watcher wrote on Jan 16, 2008 9:09 AM: I just had a huge argument with a local real estate agent this morning that said why make an offer on a home because the lender will not drop the price on a REPO because they had to pay over $500,000.00 to buy it back. That would make the house at least $100,000.00 over priced for the current market. I say that's their tough luck and if they don't like what I offer they can continue to sit on the property until doomsday. I am the buyer and this is a buyer's market. They had their way with prices and now I have mine. I'll sit and they can sit and we will see who wins. I refuse to be on the short end of the deal.
To Olaf wrote on Jan 16, 2008 9:21 AM:GWB has to take responsbility for the economy including the devaluation of the dollar, which in no small part has contributed to the current housing crisis. Developers and investors (which you call morons, how many morons do you know that can bring home a six figure income and still have plenty of time for family life?)did not create the housing crisis, mortgage companies and the current administration did it. President Clinton balanced the budget and started paying off debt, strengthening the dollar. Bush has re-introduced deficit spending, increasing the national debt to obscene levels. The debt he has created for Iraq alone is equivalent to more than $20,000 for EACH American citizen! So yes, he is to blame along with the banking industry.
No Bail Out wrote on Jan 16, 2008 9:39 AM:If you want to fix some blame, how about looking at the loan companies who wrote garbage loans to people who can't afford the house. And let’s not forget the appraisers who are in bed with the lenders. Lastly, how about the people who purchased the loans, gambling that the home values would stay high and the interest rates would be low.
I didn't do any of these things and I don't want to get stuck bailing these people out.
The only thing that is going to stop this avalanche is the investors coming in and purchasing the properties.
Ups & Downs wrote on Jan 16, 2008 10:54 AM:When housing prices were going up, everybody was all smiles and didn't care what the long term impact would be on the economy. The housing market just ran out of buyers that could afford to buy but prices continued to go up and home owners kept smiling. House prices in California is like playing the stock market - up - down etc. where other parts of the country, a house is a home and not an investment. If Californians love the upside, they need to take the downside as well. As long as your house is an investment first, up and down markets will continue. This investment attitude along with insane planning on the part of governments forcing large homes be built, makes California a mecca for every fast money speculator in the country,to include lenders, realtors and speculators.
home owner wrote on Jan 16, 2008 11:38 AM:I am glad that we didn't overstretch ourselves and buy the biggest house we could possibly buy. Some people just got over their head and did not plan for the what if's. We could have bought a bigger and nicer house, but we stayed within our means and planned for the interest rate increase so when everything went down we didn't have to loose our home.
arny's army wrote on Jan 16, 2008 11:45 AM:welcome to America "The homeless,free and the brave" Of course the congress will bailout the banks in the guise of helping the "Common Citizen" but only those in good standing on their loans,this way the banks havent lost a dime of interest on those properties and will continue to reap profits on good and bad paper(government bailout monies) wake up people (hopefully in your home)Bush runs his mouth IMF and World bank run this country
Life in 92011... wrote on Jan 16, 2008 3:12 PM:...is great! Why all the complaining?
To: Life in 92011 wrote on Jan 16, 2008 3:51 PM:It was even better when your 92011 was 92008!
Don`t overpay wrote on Jan 16, 2008 4:41 PM:Stay on your perch, home values will continue to plummet at least through spring 2009 if you buy now be sure to offer far below the sellers asking price. Don`t listen to the realtors wishfull thinking, we`ve been watching the market for the last year & a half & houses are not selling unless the sellers slash there asking price by at least 20%.
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