San Diego county foreclosures on the rise

By Emmet Pierce
UNION-TRIBUNE STAFF WRITER

May 17, 2007

The trend of rising home foreclosures continued in April as 525 San Diego County dwellings were reclaimed by lenders, surpassing March's record of 433 properties.

There were 1,346 notices of default, the first step in the foreclosure process, DataQuick Information Systems reported Thursday. That was a slight decline from March, when 1,395 such defaults occurred.

Most homeowners who fall behind in mortgage payments bring their loans current before foreclosures occur.

One reason for rising foreclosures is heavy consumer reliance on risky adjustable-rate loans that begin with low “teaser” interest rates and adjust upward after several years, said DataQuick analyst Andrew LePage. “No doubt some of it is the riskier stretch financing coming back to haunt people who can't hold on once a reset kicks in or a teaser rates expires,” he said Thursday.

Another reason for record foreclosures is softening home prices, he said. “Appreciation has disappeared across a huge part of San Diego County, and now we have declines,” he said. “It has left anyone who is struggling to make their payment in a difficult position if they have little or no equity.”

Many home values within the county doubled during the first half of the decade. The median price for all San Diego County homes in April was $490,000, down 3 percent from a year ago, but unchanged from March. That marks a drop of 5.3 percent from November 2005, the peak of the housing boom.

Zoltan Pozsar, senior economist at Moody's.com, said he expected foreclosure rates to continue to rise in the months ahead in San Diego County and other U.S. markets that saw huge price gains during the housing boom. “We are going to be breaking records in terms of foreclosures and delinquency rates throughout this year.”

Even so, he stressed that foreclosures remain a small fraction of the overall San Diego County housing market. “The housing slowdown is unlikely to derail the local economy,” Pozsar said.

Repost of SignOnSanDiego.com