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Second-quarter notices of default in L.A. County plunged 47 percent from a year ago and 17.4 percent from the previous three months, according to Dataquick. The biggest drops were in the lower-priced areas where foreclosures had been skyrocketing during the height of the real estate crisis. Ordinarily, this would be considered great news, but there's been growing concern that the housing market is stalling out. From the WSJ:
Economists aren't singling out one reason for the stalling housing market. A variety of factors have led to flagging confidence, they say, including sluggish labor markets, global economic turmoil and falling stock prices. While the housing downturn dragged the economy into a recession nearly three years ago, now it is the economy that is pulling down housing, says economist Patrick Newport at IHS Global Insight. Without sustained job growth, the housing market likely won't improve. That in turn will ricochet across manufacturing, retail and other trades heavily dependent on home building and consumer spending.
The Dataquick numbers suggest that the first wave of notices of default - the initial step toward foreclosure - is pretty much running its course.The median origination month for last quarter's defaulted loans was August 2006, right around the time the boom was starting to peak. Lenders that originated the most loans that went into default last quarter were World Savings (2,982), Washington Mutual (2,547), Countrywide (2,532), Wells Fargo (2,177) and Bank of America (1,049). From press release:
"Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales. Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves under water, which is a significant factor in letting a home go," said John Walsh, DataQuick president.
The big concern is that the folks who have lost their jobs and are struggling to make ends meet might be forced to give up their properties. On this point, the numbers are inconclusive, but if there is another dip, it would put additional pressure on an already shaky recovery.
Notices of Default
County/Region 2009Q2 2010Q2 Yr/Yr%
Los Angeles 24,622 13,045 -47.0%
Orange 8,261 4,313 -47.8%
San Diego 9,866 5,458 -44.7%
Riverside 14,302 7,266 -49.2%
San Bernardino 10,852 5,945 -45.2%
Ventura 2,431 1,346 -44.6%
Imperial 721 375 -48.0%
San Francisco 589 431 -26.8%
Alameda 4,616 2,615 -43.3%
Contra Costa 5,017 3,139 -37.4%
Santa Clara 4,099 2,313 -43.6%
San Mateo 1,274 914 -28.3%
Marin 381 307 -19.4%
Solano 2,281 1,376 -39.7%
Sonoma 1,370 916 -33.1%
Napa 356 220 -38.2%
Santa Cruz 452 298 -34.1%
Santa Barbara 835 499 -40.2%
San Luis Obispo 491 359 -26.9%
Monterey 1,312 664 -49.4%
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.