California Foreclosures Hit 236,000 Homes in 2008
Real estate data company, MDA DataQuick revealed that California foreclosure rate hit over 236,000 last year while the total number of homeowners who failed to meet their monthly mortgage peaked at 404,000.
California foreclosure started to flood the housing market in 2007. The trend was initially blamed on adjustable-rate loan resets and declining home values. However, industry analysts and lenders believed that the trend was exacerbated by the increasing unemployment in the state which has jumped to 9.3 percent.
According to DataQuick, the number of distressed properties in California increased by 180 percent in 2008 compared with 2007. It added that the 2008 foreclosure data was the largest since it started monitoring the housing market in 1988.
On a positive note, the number of repossessed homes in November declined to 14,000 from the 25,000 figure in September. However, Andrew LePage, a DataQuick analyst, explained that the decrease was just a temporary phase because of a state law that required mortgage lenders to contact delinquent homeowners before they foreclosed.
Indeed, the rate of foreclosed homes increased by 14 percent in December, together with the number of notice of default, the issuance of which means the start of the foreclosure process.
Some of the hardest hit areas in California are the Antelope Valley, Inland Empire and Central Valley. In the county of San Bernardino, 20 homeowners per 1,000 households have lost their homes.
These areas attract first-time homebuyers who want to take advantage of low home prices. In Southern California, the December 2008 median home price declined to $278,000 from January’s $415,000.
An analysis by Credit Suisse, an investment bank, indicated that the number of homeowners who lost their homes will start to decline in 2009 because of subprime loan and prime loan resets reaching their peak.
It is expected that prime loan resets will peak at over $40 billion by mid-2010.
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