The other part of the housing picture: Big drop in foreclosures

Credit higher home prices, an improving economy, and new foreclosure regulations, according to Dataquick. First-quarter default filings in California were down 67 percent from a year earlier - the lowest level since late 2005 (filings were down 65.2 percent in L.A. County). Seems as if many of the foreclosures in lower-cost neighborhoods - the source of much of the post-recession activity - have run their course. From press release:

"Foreclosure starts were already trending much lower late last year because of rising home prices, a stronger labor market and the settlement agreement between the government and some lenders. But it appears last quarter's drop was especially sharp because of a package of new state foreclosure laws - the 'Homeowner Bill of Rights' - that took effect January 1. Default notices fell off a cliff in January, then edged up. In recent years we've seen temporary lulls in foreclosure activity after new laws kick in and lenders adjust. It's certainly possible foreclosure starts will pick up at some point this year if lenders need to play a lot of catch-up," said John Walsh, DataQuick president. "Rising home prices will be key to the final mop-up of the foreclosure mess," he added. "As values rise, fewer people owe more than their homes are worth, and more people can refinance into a more favorable loan. It also means more who fall on hard times can sell their homes for enough to pay off the loan."