Foreclosures keep skyrocketing
By: ZACH FOX - Staff Writer
Riverside County second hardest hit in nation | ∞
RIVERSIDE -- The number of foreclosures in Riverside County continued to rise at a meteoric pace in January, increasing the downward pressure on local home prices and flooding the regular home market.
Foreclosure sales, auctions that are typically won by the lender of the mortgage, hit 2,813 properties in January, up 475 percent from the same time a year ago, when 489 foreclosures sold, according to a report released Tuesday by ForeclosureRadar, a foreclosure tracking service based in Discovery Bay.
The increase was a 53 percent jump in just one month.
After banks win an auction, they turn to real estate agents to sell the distressed properties in the general market.
"It essentially makes a bad situation worse," said Sean O'Toole, founder of ForeclosureRadar. "When you have more supply than demand, that means lower prices."
The month-month increase was a large jump, but it was just under the statewide average uptick of 55 percent. That meant that Riverside County shed its dubious distinction as the state's foreclosure capital, ceding the title to San Joaquin County.
But Riverside's foreclosure rate of one sale for every 694 people was still enough to claim the second-highest foreclosure rate in the state.
Meanwhile, the number of notices of default leapt 20 percent to 5,372 notices countywide from December's 4,488. Since a notice of default -- a letter following late payments on a mortgage -- is the first step in the foreclosure process, the number of foreclosures plaguing Riverside County is unlikely to decrease anytime soon. Data on year-over-year defaults was not available Tuesday.
Norm Miller, a professor with the University of San Diego's Burnham-Moores Real Estate Center, said that as long as foreclosures continue to constitute a significant portion of all sales, the housing market will not recover.
But Miller said he think the housing market could still see a turnaround this year.
"It's possible. It would take a reversal in consumer confidence," he said. "What will trigger that, I'm not sure. But give me some good news, like we start pulling out of Iraq and the economy looks better than we thought and oil prices are lower than we thought."
O'Toole said he thinks the plan designed to stem foreclosures announced Tuesday by the federal government and six major lenders will not do much to contain the flood of foreclosures.
"The problem is that the problem is not resolvable," O'Toole said. "You can't solve (a foreclosure) without forgiving that debt. ... And it has really big implications to reward folks who didn't do what they agreed to do."
San Francisco County had the lowest foreclosure rate in California, at just one foreclosure sale for every 13,770 people.
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Cal wrote on Feb 13, 2008 10:00 AM:To own a $550k home you MUST make at least $160k a year. Most who bought in Riverside country do not make near this annual income and will just plain lose their home. This is as real as gravity. I suggest people who fit this profile simply walk away from their homes and start again, smarter and less arrogant.
Paul wrote on Feb 13, 2008 12:34 PM:The market was inflated when most people bought from 2004 to 2007. Banks should cut a few hundred thousand dollars off mortgages for this group. Banks are already losing too much.
Mark wrote on Feb 13, 2008 1:47 PM:It helps to actually look over the paperwork as opposed to blindly signing documents with your credit history on the line. It's live & learn I guess for most of these ... .
Go away wrote on Feb 13, 2008 2:00 PM:I hope the banks who funded these loans start to go away.
Resident wrote on Feb 13, 2008 5:10 PM:What plans do the feds have of getting some of the homes on the market sold to stimulate the economy? There needs to be some new and improved loan programs to help first time buyers that have a decent documented income into their first home. People like us that wanted to relocated out of state a year ago took our home off of the market being there were few people that could close the deal... Something really needs to be done ASAP.
And it is really is not fair to those of us that have been in our homes longer than 5 years and are seeing the equity go down every day being these banks were loose with their lending.
Make it known there are 35 and 40 year loans out there to help people start out.
Glad wrote on Feb 13, 2008 9:37 PM:I'm sorry to see people lose their homes. But, the overall picture is good to see a market correcting itself. This correction will hurt in the short term, but in the long run we all win and our kids will be able to buy a house with a realistic price instead of overinflated and unaffordable. I hope the prices keep coming down. Like the first comment said above, a typical $550000 house requires a $160000/year income which is not what most make in this area. We need houses to drop down so hard workign people can afford a home to raise their family.
Ty wrote on Feb 13, 2008 10:17 PM:Cal,
Well said. That simple fact led me to conclude a bubble existed. Being in the top 10% of earners in the USA, I felt 'priced out'. But by whom, I asked myself. The answer: by people that couldn't afford the artificially pumped up prices.
Classified wrote on Feb 14, 2008 4:31 PM:I saw an ad for apts for rent in Yorba Linda last weekend. A large Toll McMansion was divided into 3 sections: upstairs, downstairs, and the 4 car garage. The upstairs master was made over to a living room and kitchen (originally the m. bath) and included 3 large bedrooms and 2 baths for $2100/mo. Stairs were added to the deck for a private entrance behind a wrought iron gate. Downstairs remained pretty much the same and occupied by the owner of the home. The garage had annexed the downstairs half bath and a small shower had been installed. The garage doors looked the same from the street; but insulated and a finished wall on the inside. Entrance was around the back thru a set of french doors that opened to the pool area. A small kitchen area with a huge window with a great view of the canyon was in one corner and included a built-in booth as a room divider. There was thick carpeting and several other built-ins for storage plus a queen-sized murphy bed. This "studio" was being rented out for $975. All work was professionally done and the house was beautifully landscaped. A carport was added over the driveway for one covered parking spot and a large storage shed with a locked cabinet big enough for a bicycle and a few boxes was offered on the side yard. Not bad rent for the best schools in Orange County. I think we'll see more of this as the housing crisis worsens.
Mr Pasadena wrote on Feb 15, 2008 9:16 AM:Just let the market work. Prices need to come down. I am ready to spend $300K+ on a home and improvements. But that amount, even today, is nothing with these ridiculous prices. The government wants me to spend my money on the mistake someone else made. Unbelievable. When the price come down, I'll start spending my money. Isn't that better than having the government spend our tax dollars for the greedy people that caused this problem?
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