Foreclosure Highest in Two Decades In California

January 25th, 2008

A real estate firm reported that due to homeowners falling behind on their mortgage payments, foreclosures have shot up to a twenty year high in California during the fourth quarter of 2007.

More than 31,600 homes were put up for foreclosure by the end of the last year maing this the highest figure since DataQuick Information Systems started keeping statistice on foreclosures from 1988. This figure represents more than 30.8% increase in foreclosures over the previous quarter, and a whopping 421% increase from around 6072 foreclosures during the same period in 2006.

The carnage does not stop here. More than 81,500 notices of default have been sent to homeowners statwide in this last quarter, marking a 12.4% increase over the last quarter and a substantial 114% increase over the previous year.

These notices may end up in foreclosure, though many will be able to salvage their home . It is expected that 41% will be able to make their mortgages current, refinance, sell their properties or pay off their outstanding debt out of this total figure. The alarming thing is that this figure stood at 71% just a year ago.

Default notices were over 260% higher in Monterey County with around 1048 default notices being sent out in the last quarter of 2007 alone. DataQuest also reported that Monterey County foreclosures went up a shocking 1011.8% in the last quarter over the same period in 2006, with 378 foreclosures compared to just 34 foreclosures a year ago.

Pacific Valley Bank CEO Ben Tinkey says “It will touch everybody’s lives, in or out of the business,”. He predicts that the market will continue to shift in an already tight rental market, as vacancies fall and rent goes up due to higher demand. He feels that these housing problems can create more demand for local employers looking to hire people who are likely to face longer commutes while they continue to search for cheaper housing.

Tinkey says “When I go to hire somebody, they’re going to want a little bit more to make it worth their while. In the long run, we have to pass it along to the consumer to make it worth our while. That’s back to the dilemma of not having a lot of inventory.”

While we are seeing asteady climb in Monterey County’s foreclosure rates, the county is nowhere close to areas like California’s Central Valley (Composed by Sacramento Valley: Butte, Colusa, El Dorado, Glenn, Placer, Sacramento, Shasta, Solano, Sutter, Tehama, Yolo and Yuba; plus San Joaquin Valley: San Joaquin, Fresno, Kern, Kings, Madera, Merced, Stanislaus and Tulare counties), where a large number of new homes are flooding the housing market. Due to this, prices of homes are not likely to decline too much.