California Foreclosures WAY UP!

In a report out this week from RealtyTrac, California has shown a 40% increase in foreclosures JUST over the last 2 months! We have supassed Texas and Florida for having the "most new forclosure filings" in the country.

In September, there were approx 14,806 owners entering some stage of foreclosure! That is over 3 times as many in September 2005. That figure equates to 1 forclosure filing for every 825 households. This does not mean that the home has been foreclosed on, just that the proceeding has commenced for such action.

The nations largest foreclosure rates were recorded in Michigan, Colorado, and Nevada. Other states reporting foreclosure rates among the nation's 10 highest were Florida, Georgia, Indiana, Illinois, Texas, Ohio and Utah. Nationwide, foreclosure activity has increased 63% from this time last year. An incredible figure.

Are things really that bad though? While the trend isn't one that is pleasant, it was expected with this real estate downturn. At the height of our real estate boom, many buyers,especiallyy broke first time buyers, were leveraging theirmortgagee to the hilt, and mortgage brokers were more than happy to accommodate. Nothing down? Stated income?Negativee amortization loan? SURE WHY NOT! Everyone was making money hand over fist with they way the market was appreciating. Well, all good things come to an end, okay, maybe a slooowwwsmoothh end, and people who purchased about a year ago or less, and those who took all of the equity in their home as if it were an ATM card have no place to go. Their home values aren't really rising any more. In the past when they couldn't afford the payments, you just got an equity line of credit, and paid your more pressing debts! No longer is this the case.

Lenders are being extra careful when they appraise a properties value now, to make sure they aren't over lending on a home that is potentially decreasing in value monthly. If the homeowner has no equity, the homeowner can no longer get that equity line, they can no longer "cash out". So what do they do...they sell and do a "short pay" (where you make an agreement with lender to sell for less than is owed on the home) and make NO money off their "investment", and or they FORECLOSE. I guess they could always make more money and just pay their mortgage, but that is much easier said than done.

As I mentioned, this foreclosure rate increase was expected. There were foreclosures happening in the height of the boom...just much less of them. The media will soon lose interest in reporting the surging increase in foreclosure rates, and will move on to other items of interest.

Just as I read articles of gloom and doom, I read of hope and positivity. The latter just gets reported much less often, if at all - you have to dig for it. Housing demand for instance, is expected to remain, I won't say remain strong, I'll just say remain. It's better than not being there at all! Low interest rates will be the key factor to keeping demand in-play. The fed meets again on Oct 24-25th to decide whether or not to keep rates at bay for the 3rd straight time or not. While inflation is a concern of the federal reserve, they realize the effect rising interest rates will have on the already staggering housing market.

In Santa Clarita we have "less" to worry about, as opposed to other areas of California, and regions in the country. We have a very strong local job economy. Santa Clarita is an unusually clean, well put together, master planned community (city actually). The schools are great, there is a variety of shopping to keep you in town, and now with things such as a Valencia comedy club, the city is keeping you here for entertainment as well. There really is not another city MUCH like it, if at all. The demand will always be a BIT higher here than in most parts of LA County and California for that matter.

Inventory of homes currently for sale in Santa Clarita is falling slightly, this was expected to happen as Summer passed and winter & holidays approach. Remember, lower inventory is better for sellers, in that prices won't fall as much if at all, and high inventory means more decisions for buyers, which equates to more seller competition (downward pressure on prices).

It will be interesting to see where Fall/Winter '06 leads us and what kind of year 2007 will be. Lets just get through the rest of the year and enjoy the coming Holiday season!

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