Foreclosures in O.C. Down After Steep Rise for Six Years
In a sign that the local housing market is strengthening, the number of Orange County homes taken back by lenders declined last year for the first time in six years, a data service reported.
“What we’re seeing is an improvement in the overall economy, especially the employment sector, so more people are being able to pay their mortgage,” said Nima Nattagh, an analyst with TRW REDI Property Data in Anaheim. “A decrease in foreclosures will help stabilize home prices.”
The number of home foreclosures declined about 3% last year, according to TRW REDI, which tracked foreclosures during the first 11 months and estimated the number of foreclosures in December.
Mounting numbers of foreclosures in recent years helped depress home prices throughout Southern California because the homes were often sold at a loss. A decrease in foreclosures is good news for the real estate market in 1996, real estate brokers said.
Since foreclosures are a lagging indicator, reflecting what was happening in the real estate market six months ago, the housing market could be in even better shape now, said Nattagh.
Foreclosures should total 5,885 in 1995, compared to 6,070 homes foreclosed the previous year, according to TRW.
Orange County foreclosures have risen steadily since 1989 when only 365 homes went into foreclosure. That number jumped to 596 homes in 1990, 1,584 homes in 1991, 3,109 homes in 1992 and 5,375 homes in 1993.
In the five Southern California counties, total foreclosures were up only slightly, a very good sign, said Nattagh. TRW projects a total of 56,565 home foreclosures in 1995, compared to 56,393 foreclosures the previous year. Foreclosure figures were not available for Ventura County.
However, one real estate specialist noted that foreclosures are up in the Bay Area and said that foreclosures may be on the wane in areas of Southern California because more people are doing “short sales.”
These transactions occur when the owner sells the home for less than what is owed, and the lender agrees to accept less for the home than the amount of the outstanding mortgage. Short sales allow an owner to stave off foreclosure.
“In Southern California, short sales are much more common. Lenders are working with borrowers to avoid foreclosures,” said Derek White, president of RealtyTrac Information Systems in Santa Barbara, a data agency that tracks troubled properties.
“This decrease in foreclosures doesn’t mean the real estate market is getting any better--it’s really just beginning to stabilize,” said White.
Lowell Overton, a broker who specializes in foreclosures, said mortgage lenders are more willing to agree to a short sale because a foreclosure is too time-consuming and troublesome.
“Our market is still stagnant,” said Overton, who currently is trying to sell more than 100 foreclosed homes in Southern California, including Orange County. “I am still seeing a lot of foreclosures and even more short sales.”
One of the most notable foreclosures in Orange County during 1995 was the Harbor Island mansion in Newport Beach owned by businessman George Yao. Bought for $13.8 million in 1991, the home was taken back by the bank in June and bought by an investor group for $7.35 million. It is now on the market for $8.9 million.
San Clemente showed the most improvement of all Orange County cities as the number of foreclosures there dropped 40.7% to 217 homes from 366 homes. In Anaheim Hills, foreclosures dropped 28.1% to 122 homes from 170 homes. El Toro and Lake Forest also showed strong improvement as foreclosures dropped 27.4%.
