Foreclosure Rate Plunges 37% in Orange County
With home values moving up briskly, the number of Orange County homeowners facing foreclosure declined in the third quarter to the lowest level in more than six years, a real estate research firm said Monday.
Lenders started foreclosure proceedings against 1,379 homeowners in Orange County during the three months ended Sept. 30, down almost 37% from the same quarter last year.
The decline was one of the biggest among major metropolitan areas in the state, and pushed the total to the lowest quarterly level since the firm, Acxiom/DataQuick Information Systems Inc., began tracking home foreclosures in 1992.
With home values rising, fueled by strong demand and low interest rates, “there aren’t that many distressed households anymore,” said Acxiom analyst John Karevoll.
Foreclosures throughout the state also declined to their lowest quarterly levels in nearly six years, the firm reported. Lenders took foreclosure action against 28,088 homeowners, a 15% decline from a year ago. It was the lowest number of foreclosures since the fourth quarter of 1992.
Rising home values have helped reduce foreclosure proceedings. Home values in California, for example, are going up at an annual rate of 7% to 8%, the firm noted.
The survey measures notices of default, which is the first step of the foreclosure process. The entire process takes at least four months, and usually results in two-thirds of the homes being lost to foreclosure.
In Orange County, the drop in foreclosures stems from the anemic 3.2% unemployment rate, the lowest in Southern California, as well as surging home values, said Chapman University economist Esmael Adibi.
“I’m not surprised,” Adibi said of the big decline. “If you look at those variables, it indicates why foreclosures in Orange County are going down so fast compared to other areas.”
Home values in Orange County have been rising throughout the year. In September, for example, the median home price rose to $227,000, an increase of 9.7% over the median price for the same month last year. Sometime this month, home values should surpass their pre-recession peak in Orange County, the firm said.
With home prices improving, owners can sell their properties, pay off their loans and walk away with money, said John Karevoll, an analyst with Acxiom/DataQuick.
Homes in foreclosure also are not dragging down prices as much as in previous years, he said.
These homes would be priced about 7% below comparable homes. Three or four years ago, when distressed properties made up a significant slice of the market, they were put up for sale at a steeper discount--8% to 12%, Karevoll noted.
“Now, foreclosed properties have a negligible influence on the overall market,” he added.
In Southern California, San Diego and Los Angeles counties also saw double-digit declines in foreclosures.
Lenders in San Diego County started foreclosure proceedings against 1,370 homeowners, a 19.8% decrease. In Los Angeles County, foreclosures dropped 13.6% to 8,378 homes over the last year.
In San Bernardino County, where the upturn in housing prices has been relatively recent, foreclosures declined at a more modest rate, 6.2%. Ventura County recorded a 3.2% decrease.
Overall, foreclosures in Southern California dropped 16.1% to 17,148 homes from 20,442 a year ago.
But the Bay Area recorded the largest regional decline, 26.8% to 3,827 homes, DataQuick said.
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Foreclosures Falling
Southern California foreclosures during the third quarter declined 16% from the same period last year, led by Orange County with a drop of nearly 37%. The number of recorded notices of default, by county:
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County 1997 1998 % change Orange 2,176 1,379 -36.6 Riverside 3,011 2,396 -20.4 San Diego 1,708 1,370 -19.8 Los Angeles 9,696 8,378 -13.6 San Bernardino 3,389 3,178 -6.2 Ventura 462 447 -3.2
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x 1997 1998 % change Southern Calif. 20,442 17,148 -16.1 Bay Area* 5,231 3,827 -26.8 Statewide 33,063 28,088 -15.0
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* Includes San Francisco, Alameda, Contra Costa, Santa Clara, San Mateo, Marin, Solano, Sonoma and Napa counties
Orange County Low
The 1,379 foreclosures in the third quarter were the lowest recorded in an Orange County quarter in at least 6 1/2 years:
1992
1st qtr.: 1,860
1998
3rd qtr.: 1,379
Source: Acxiom/DataQuick
