If you were to sum up what's expected for the Orange County real estate market in 2012, Daren Blomquist has one word for you: foreclosures.
That's not too surprising, seeing that he's with Irvine-based foreclosure tracking firm RealtyTrac, but Blomquist sees this as good news, eventually, for Orange County and the nation.
"What we're seeing is this rising tide of new foreclosures that are starting up in Orange County, and it also applies nationwide," he said. "If you look at notices of default in Orange County in the last few months, those are really, consistently going up."
In October, foreclosures in Orange County hit a 25-month high, with 2,278 notices of default, the highest it's been since 2009. In fact, November also saw a year-over-year increase, according to RealtyTrac.
"We think we're coming out of this artificial trough in foreclosure activity that we had in 2011," Blomquist said.
A drop in foreclosure activity in 2011 can be attributed to lenders being stymied by legal issues and documentation issues that stalled foreclosure processes nationwide for much of the year, but now lenders are starting to adjust to that and starting to file some of those delayed foreclosures, he added.
"In late 2011 we're seeing these new mini-waves of foreclosures starting in Orange County, which does portend a busy foreclosure season in early- to mid-2012 in Orange County," he said.
Will Orange County see record foreclosure numbers in 2012?
"I don't think we're going to see record numbers," Blomquist said.
The peak foreclosure activity in Orange County was reached in July 2009, with more than 7,200 filings, an extreme month during a rough year where the monthly average was about 5,000 notices of default being issued in the county each month.
In 2010, the rate of monthly fillings dropped to around 3,900, and in 2011, through the month of November it was down to about 3,400 per month.
"I think in 2012 were going to probably end up probably somewhere close to the 2010 numbers," Blomquist said, and therein lies the good news. "The good news is we're probably past the peak in this."
That's the good news. The bad news is the rising number of foreclosures may put a damper on Orange County home prices.
"The implication is home prices in Orange County are not going to rebound anytime soon, we're going to continue to see those weighed down by REO's and shorts sales," Blomquist said. "You're going to see home prices remain petty flat in Orange County for 2012."
However, the market in Orange County is relatively well-equipped to absorb these properties, and absorb them fairly quickly, because of strong demand for many areas in the county, particularly coastal communities, he added.
Nationwide, RealtyTrac expects foreclosure and short sales to surge later in 2012, as the foreclosure process is actually slower in other large states than it is in California, according to the firm.
The time from when a notice of default is given to when a home is actually foreclosed upon has increased in recent years, but it's still relatively lower in California than in other large states, Blomquist noted.
In California, the time from notice of default to when person loses their home is 363 days, slightly higher than national average of 336 days. However, in California by comparison the process is far shorter than in other big states, like Florida, where the process averages 750 days, according to RealtyTrac.
"(Foreclosures are) actually happening faster in Orange County than in other parts of the country," Blomquist said.
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