California Foreclosed Homes
California has experienced some of the highest foreclosure numbers in the country. The state earned the dubious distinction of being #2 in foreclosure activity; for every 200 households in California, there was 1 entering into some stage of the foreclosure process. In terms of trending predictors, California is not faring well because in the first three months of 2008 foreclosures soared more than 300%. As more adjustable rate mortgages continue to reset in the late spring and summer months, experts predict that these numbers will continue to climb even higher throughout 2008 and beyond.
California Foreclosure Trends
Listings for California foreclosed homes have grown quickly, particularly when viewed as a percentage change versus 2007. April 2008 saw over 110% increase in foreclosure activity vs April 2007. Foreclosure filings were reported on over 63,000 California properties in Aril of 2008, equal to March of 2008 but still the most of any state in the country.
The Los Angeles Times reported that in April 2008, more than 1,000 foreclosed homes were auctioned off every weekend in courthouses across the state. The April total of foreclosure sales at auction – over 22,000 for the state, represents a sum of over 40% over March and is the highest level of foreclosure sales ever in California. When taking a look at pre-foreclosure rates in California, the outlook is equally grim. One reliable source sited over 44,000 new "Notices of Default " filings in April, a new record for California. Notices of Default (or NOD) are the first step in the foreclosure process. Many experts predict that the worst is still to come for California.
What areas of California are the hardest hit in the foreclosure crisis? Unfortunately the pain is being felt throughout the state. But six cities in particular reported foreclosure rates that ranked in the top 10 among over 250 metropolitan areas tracked. Those cities are:
- Merced
- Stockton
- Modesto
- Riverside-San Bernardino
- Vallejo-Fairfield
- Bakersfield
The increase in California foreclosed homes has led to many banks and lenders lowering prices on foreclosed homes hoping to price them to move quickly. Foreclosure for sale by banks and lenders have been selling for 15 to 20 percent below market value. These discounts are expected to increase even more as foreclosure listing inventories grow. Aggressive pricing by banks, homeowners who are not yet in foreclosure but desperate to sell their properties, and a lack of financing for consumers looking to purchase properties These three conditions have created a perfect storm in California, resulting in home prices dropping 32% in April of 2008 vs. April 2007.