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San Diego
Monday, May 20, 2024

October ‘Bad Month’ for Notice of Default Filings in County

Economists and researchers in San Diego are closely charting a rise in both notices of default and foreclosures, which reached a 25-year high this year, according to county records.

Mount Pleasant, Pa.-based Default Research Inc. reported San Diego County led the state with 3,427 notices of default and foreclosure in October, up 400 percent from a month earlier.

The county had just 690 foreclosure filings in October 2006.

Default Research conducts research in eight states, including 23 markets in California.

“Right now Southern California is the epicenter of the foreclosure crisis,” said Serbar Bankaci, president and chief executive officer of Default Research in its October foreclosure report. “Out of the five largest counties in the state, San Diego is hardest hit, followed by Riverside and Los Angeles.”

Los Angeles had 6,832 filings and Riverside had 4,373 foreclosure filings in October 2007, said Default Research.

A Bad Month

Bankaci said while October was a bad month for California, especially San Diego, the coming months could get worse. He said a large number of three-year adjustable rate mortgages are due to reset in the first and second quarters of 2008, which could result in a large increase in foreclosure filings.

“California had some of the most expensive real estate in the country and many people bought homes they couldn’t afford with teaser loans,” he said. “Those families who lived beyond their means are going to go from boom to bust and, unfortunately, join a growing number of Americans in foreclosure.”

The median single-family detached home sales price in San Diego County was $531,000 in October, according to San Diego Association of Realtors data. The median single-family attached home was $340,000.

Discovery Bay-based ForeclosureRadar reported foreclosure filings, including notices of default, foreclosures and properties sold at auction, increased 17 percent in October over September, and 319 percent from October 2006 in San Diego.

ForeclosureRadar founder Sean O’Toole said he sees no sign of a peak, and does not expect to see a high in foreclosure filings until the third or fourth quarter of 2008.

Missed Payments

“The sales we are seeing now are from missed payments in March,” O’Toole said. “So current auction sales really have not yet been impacted by either August’s liquidity crunch or the ARM reset peaks (in November).”

County Assessor/Recorder/County Clerk Gregory Smith said many national foreclosure research firms lump together both notice of default and foreclosure numbers, thus giving a false but heightened sense of doom in the real estate market.

Smith said 911 property foreclosures were recorded by his office in October, a small number compared to the 3,427 foreclosure filings, including notices of defaults and foreclosures reported by Default Research for the same month and the 3,527 default and foreclosure notices reported by ForeclosureRadar.

Jeff Olson, division chief for assessment services with the Assessor’s office, agreed with Smith. Olson said it is important to look at foreclosure numbers separate from notices of default. Yet, he too noted significant increases in notices of default and foreclosures from last year.

“We have not seen anything this high since 1996, where we had just under 6,000 foreclosures. That was in the depths of our mid-’90s recession,” said Olson. “Fortunately, we are not in a recession now, but we do have this sub-prime situation. It is not a result of weakness in the real estate market. It is weakness of the credit market and without credit you can’t have sufficient demand to fuel the kind of increases we were seeing for the past four, five and six years.”

More than 17,000 notices of default were recorded this year through October in the county, according to the Assessor’s office. The 17,810 notices of default surpass year-end totals going back more than 25 years. Last year, there were 10,294 notices of default, the highest since 1996.

In addition to default notices increasing, foreclosures have also hit record high numbers. The county reported 6,596 foreclosures this year through October. Last year, 2,065 foreclosures were reported for the entire year. In 2005, there were 559 foreclosures and 553 in 2004, according to county records.


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