Report: ‘Foreclosure Starts’ On The Rise In California
Thursday, May 9, 2013
A new report shows California home “foreclosure starts” – or the number of homes just entering the foreclosure process – were up for the third straight month in April.
The increase isn't a surprise to analyst Daren Blomquist of research firm RealtyTrac.
"It's what we expected to be honest but it's something that definitely is a cause for concern."
That's because those properties getting notices of default will likely be repossessed, says Blomquist.
Analysts aren't surprised by the increase because they say lenders are picking up the pace of foreclosures now that they've had several months to adjust to stricter guidelines under California's Homeowner Bill of Rights.
More than 8,500 properties received those notices in April…a 13% increase from March.
But Blomquist points out - foreclosure starts are still way down compared to last year.
"That 8,500 is 55% below what we saw last year in April (when) there were more than 18,000 of those foreclosure starts. So in the broad scope of things, the California market is doing much better."
Once a mainstay in the top five states with the highest foreclosure rates, California has now dropped to 13th in the nation.
Blomquist says home foreclosure numbers continue to drop in the Sacramento area.
"Foreclosure activity is down 6% from the previous month and down 60% from a year ago."
Blomquist points out that - even though overall foreclosure activity is down, "notices of defaut" went up by 30% from March to April.
"The conclusion here is that we're through the worst of the foreclosure crisis in a market like Sacramento but there's still going to be some bumps in the road as lenders have to deal with this additional legislation in California."
Blomquist is referring to the "Homeowner Bill of Rights" enacted five months ago.
In Reno, there were just over 300 Reno properties with foreclosure filings in April.
"That was down 23% from the previous month and it was down 17% from a year ago"
Blomquist says even though bank repossessions are down in Reno, "notices of default" are on the rise.
"Those were up 71% in April from a year ago and April was the fifth straight month where we've seen a year-over-year increase in those notices of default in Reno. So those are a cause for concern going forward that that market is going to see another wave of distress going through as those notices of default translate into bank repossessions."
Nevada posted the nation's highest foreclosure rate in April.
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