Foreclosures have been dragging down home values since the housing market crisis began in 2007. A steady decline in notices of default, which officially begins the foreclosure process, could indicate a market fumbling toward health.
Although default rates were still well above historical norms, May marked the 18th consecutive month in which the number of defaults was lower than it was 12 months earlier.
“I’m heartened and encouraged we’re seeing less notices of default,” said Mark Goldman, a real estate instructor at San Diego State University. “It’s a real opportunity to preserve values for everybody.”
The rate of default in Southwest Riverside County reached 3.4 per 1,000 households, down 9.4 percent from April and 22.3 percent less than in May 2010. In North County, defaults dropped 9.6 percent from April to 1.5 per 1,000 households, 25.2 percent lower than in May 2010.
A typical foreclosure in San Diego and Riverside counties took 249 days as of March, ForeclosureRadar said.
Foreclosure sales in North County fell 28.6 percent in May from May 2010, to 0.9 per 1,000 households, down 6.1 percent from April. Foreclosures in Southwest Riverside County were down 16.9 percent from last May but rose 9 percent compared with April.
Foreclosures are still well above a rate considered healthy by economists, which is usually about 0.25 foreclosures per 1,000 households.
Part of the improvement stems from a drop in the number of people who owe more on their homes than the property is worth, called being “underwater” or having negative equity, according to real estate data firm CoreLogic.
By March, 28.5 percent of San Diego County borrowers were underwater, down 4.4 percentage points from December 2009, the first time CoreLogic published the data. In Riverside and San Bernardino counties, 47 percent of homeowners had negative equity, down 7.9 percentage points from December 2009.
Rising home prices helped some borrowers get out of negative equity: The median home price rose 2.4 percent between December 2009 and April in North County, reaching $430,000. In Southwest Riverside County, the median house price rose slightly to $202,000 in March.
Some owners were helped by a short-lived increase in buyers spurred last year by government tax incentives, which allowed some to sell their homes for less than the owners owed in loans, called a short sale. In April, 27 percent of San Diego County sales and 66 percent of sales in Riverside County were either foreclosure sales or short sales.
But while home values have fallen in recent months, which can signal more foreclosures this summer, analysts don’t think the crisis will skyrocket like it did in 2007 and 2008.
“They’ve bled out the most upside-down houses already,” Goldman said.
WOLFFewolff@nctimes.com via North County Times