Rate of O.C. Home Foreclosures Expected to Drop : Housing: A Chapman University forecast sees a decline from a level of 326 in the 1991 third quarter to 226 units by the end of 1992.

Home foreclosures in Orange County are expected to decline in the fourth quarter, according to a forecast released Tuesday by Chapman University’s Center for Economic Research.

The number of foreclosures will subside because the unemployment rate is unlikely to rise much higher, housing prices are stable and mortgage interest rates are favorable, said Esmael Adibi, director of the center.

Meanwhile, the recovery of Orange County’s housing market slowed in August as the number of permits obtained to build residences fell 14% from a year earlier, according to a separate report Tuesday by the Construction Industry Research Board in Burbank.

The rate of quarterly foreclosures is expected to decline gradually from a projected level of 326 foreclosures in the 1991 third quarter to 226 units by the end of 1992, Adibi said.

Since reaching a low of 75 units in the fourth quarter of 1989, the quarterly rate of foreclosures in Orange County has steadily increased as the local and national economies slipped into a recession.

“Despite what people feel and think, this recession is not as bad as in 1981-1982,” said Adibi, who noted that foreclosures peaked at 1,219 units in the third quarter of 1983.

The county unemployment rate, at 4.7% in August, is not expected to surpass 5.3% in the current recession, compared to an 8.3% unemployment peak in the previous recession. As a result, the impact on residential real estate will not be nearly as bad this time, Adibi said.

However, the economic recovery is expected to be slower than in the last recession because Orange County’s economy has matured, Adibi said. As a result, the drop in foreclosures through the end of next year is expected to be gradual.

Meanwhile, in home construction, builders obtained 423 permits to build new homes and apartments in Orange County during August, compared to 490 obtained in July, 1991, and 494 in August, 1990, according to the Construction Industry Research Board.

Permits issued for single-family homes went up to 317 in August, compared to 253 in July, 1991, and 117 in August, 1990. But permits for apartments fell to 106 in August, compared to 237 in July, 1991, and 377 in August, 1990.

During the first eight months of the year, 5,036 housing permits were issued, compared to 9,008 during the same period a year earlier.

O.C. Foreclosures A Chapman University study shows that foreclosures in the current recession aren’t nearly as bad as the recession in the early 1980s, when unemployment and high interest rates drove county foreclosures to a peak of 1,219 in the third quarter of 1983. The study forecasts that the foreclosure rate will drop in the fourth quarter and show steady improvement through 1992. Source: Chapman University