Another sign that the current distress in the housing market doesn’t discriminate, defaults continue to rise in the million dollar market.
Andrew Keatts of The Daily Transcript reported over the summer a study conducted by The New York Times, “…found that more than one in seven homeowners with loans in excess of $1 million are seriously delinquent…compared with one in 12 homeowners with loans below the million-dollar mark.” Keatts reported that data was not released on the state or county level “because of concerns over sample size.”
La Jolla based MDA Dataquick was able to provide more local numbers. “Dataquick found that in California ZIP codes with median home prices exceeding $500,000, notices of default (NOD’s) rose 1.5 percent from the last quarter of 2009, and declined 19 percent year-over-year. Conversely, ZIP codes in the state with median home prices below $500,000 saw NOD’s fall 5.8 percent from the last quarter of 2009, and 43 percent year-over-year.”
Keatts went on to report that although the part of the SD market that is above $500k is faring better than similar markets in CA, it is still recovering slower than the below $500k market. THE toniest ZIP code in SD County, 92067 (Rancho Santa Fe) had its NOD’s increase quarter-by-quarter 44.4 percent and 3o percent year-to-year.
Although no one knows for sure, many of the experts are speculating that a good number of these are strategic defaults, that the more well off are looking at these homes as a bad investment and just walk away since they have other substantial assets. Quoting Alan Gin, associate professor at USD “…it’s possible that those on the upper end of the market are more likely to view an underwater home as a bad investment, and thus view strategic default as an option.”
Foreclosure filings in San Diego County continued their drop in May, this time by a whopping 21% (year over year), according to Jen Lebron Kuhney of The Daily Transcript. Kuhney points out that “Foreclosures had been on the rise for three months straight before May.”
1,148 trustee’s deeds were filed, a 16% drop from April, while 1,798 notices of default were also filed, a 24% decline from March, according to Kuhney. Quoting Alan Gin, professor of economics at USD, “It’s a result more of the same of what we’ve been seeing over the past few months: The housing market is improving. The economy is improving. There is less job loss.”
Gin produces the USD’s Index of Leading Economic Indicators, and said he is cautious about making future predictions on foreclosures. Although there have been warnings of a recession double dip, “…Gin said it is possible that wave may not form.”
Concluding, Gin said, “‘We’re seeing a general rebound in terms of the economy…In San Diego we added jobs in hospitality, construction and temporary jobs. These are the first steps in business picking up again.'”
It’s been a LONG four years for a lot of people. The first “early warning sign” was construction workers getting laid off of job sites in the summer of ‘o6. That was also the last year we DIDN’T see an increase in the delinquency rate in San Diego County, until now.
Roger Showley of the Union-Tribune wrote about some postitive news recently, showing stats that the there was a drop in delinquencies in Q1 in San Diego County, and no change from March to April. There was also the good news that California’s delinquency rate dropped slightly during the same period.
In a related article, Showley also reported that defaults were down in April, to their lowest level since January. An interesting stat showed that while defaults increased in 14 neighborhoods, they decreased in 71 areas. Many of the areas that saw increases were higher end neighborhoods.
All real estate, like politics, is local. Although the foreclosure numbers for San Diego were looking better in April, nationally the news wasn’t so good. Dan Levy of Bloomberg News recently gave us the numbers, and foreclosures (nationally) climbed to a record level in April.
Executive VP Rick Sharga of RealtyTrac was quoted, “Right now it appears that banks are focusing on processing the loans already in foreclosure, and slowing down the initiation of new foreclosure proceedings as a way of managing inventory levels. We’ll probably see this trend continue for a while.”
On a related story, Alan Zibel of the AP reported recently that mortgage defaults have spiked, mostly due to the bad economic situation regarding employment (or the lack thereof). Quoting, “More than 10% of homeowners had missed at least one mortgage payment in the January-March period…”
Jen Lebron Kuhney of The Daily Transcript recently reported the San Diego County foreclosure numbers for April, and they were up for the third month in a row. Notice of defaults were down 5%.
Kuhney reported that in the first four months of 2010, there were 4930 trustee deeds filed. That was a 9 percent increase over the first four months of 2009.
While USD professor of economics Alan Gin didn’t think that this number is significant, real estate broker Matt Battiata is concerned and still maintains that a backlog of foreclosures have yet to hit the market, which could cause another housing downturn in San Diego County. Gin said he wasn’t concerned with the April foreclosure numbers, but was concerned that stability in the market could be threatened by higher interest rates.
Jen Lebron Kuhney of The Daily Transcript reported recently on the March foreclosure stats for San Diego County. The bad news is that filings were up from February, but were down from March of ’09.
According to Kuhney, 2,491 notices of default and 1,288 trustee deeds were filed in the county recorder’s office in March. Trustee deeds were up 13% from February while notice of defaults were up 6%.
Quoting from the article, “While the number of foreclosure filings are at historically high levels, there have been almost a third fewer filings in the first quarter of 2010 than there were in 2009 and a quarter fewer filings than 2008.”
Michael Lea of USD thought there was a potential of the numbers to start rising to the point that there will be a year-over-year increase because there are still a large number of loans out there that are in serious default.
Ok, ok…I know, you may be tired of hearing what Roger Showley says from the U-T, but he has been doing decent reporting on the local housing market. Late last week, he wrote about the January numbers on foreclosures and defaults. Yes, they were down for the month, but it may because banks/lenders are slowing down the process.
Andrew LePage of MDA Dataquick is quoted saying, “There’s a lot of distress stacking up outside the formal foreclosure process…It’s anybody’s guess when some or most of it will flush through the foreclosure process.”
Sean O’Toole, CEO of ForeclosureRadar.com in Discovery Bay was even more somber about the situation, saying that officials are telling lenders to keep people in their homes, which could be slowing down the foreclosure process.