Foreclosures up dramatically in SD, Riverside counties By: PATRICK WRIGHT and ANN PERRY – Staff writers Foreclosure activity has shown a dramatic increase in San Diego and Riverside counties, far outpacing most of California and the rest of the nation, according to a foreclosure tracking firm, RealtyTrac.
The large disparity is probably because of the cooling real estate market in what is one of the most expensive regions of the country, according to one local economist. San Diego County had 4,069 properties in some stage of foreclosure for the quarter that ended in September, compared with 970 properties for the same quarter in 2005, an increase of 319 percent. Riverside had 4,403 such properties for the most recent quarter, versus 1,297 for the same quarter in 2005, an increase of 239 percent. RealtyTrac, an online real estate site (www.realtytrac.com) records the number of homes that have entered some stage of foreclosure: defaults, auctions and real estate owned properties (those that have been foreclosed upon and repurchased by a bank).
A property is in default when the owner has failed to make mortgage payments, a step leading to foreclosure. Both San Diego and Riverside counties showed much higher rates of increase of properties in a stage of foreclosure than both the state and the nation. From the third quarter of 2005 to the third quarter of 2006, the rate of increase was 104 percent in California and 25 percent for the entire country. Alan Gin, professor of economics at the University of San Diego, said Thursday he was not surprised by the sharp increase in foreclosure activity in the county. He blamed the trend on the region’s high cost of housing. “The housing prices are so much higher here that people got stretched getting into a home,” Gin said. “If you got into a $600,000 home in San Diego, you’re much more likely to default than someone in a $200,000 home in Dallas.”
While regional home prices are among the country’s highest, wages have not kept pace, Gin said. “People here had to devote a larger percentage of income to housing payments,” he said. “Therefore, they are more stressed and more likely to default.” Gin, who is affiliated with USD’s Burnham-Moores Center for Real Estate, said the slowing real estate market is likely to generate foreclosure activity because homeowners can’t sell or refinance as easily as they could in the early 2000s.
“In the past, when people ran into trouble, they just sold their homes in a hot market,” Gin said. “Now it is much more difficult to do that.” He cautioned, however, that the rate of increase in troubled properties could appear dramatic because foreclosure activity has probably been low in recent years. For the month of September, the ratio of troubled properties in San Diego County was one in 401 households, while in Riverside County it was one in 133 households —- the most dire rate in California, according to RealtyTrac. The increases come during a cooling housing market in both counties, after a significant run-up in prices in recent years. In North San Diego County, prices for single-family homes failed to increase in August and September of this year, while home sales fell 34 percent last month compared with September 2005, according to the North San Diego County Association of Realtors. Mark Fabela, a local Realtor and director-elect for the board of the North San Diego County Association of Realtors, said the foreclosure increases were because of dropping housing prices.
When housing prices decline, some people can’t refinance their way out of high mortgages. “People actually overextended themselves,” Fabela said. “They get to the point where they can’t make the payments.”
Contact staff writer Patrick Wright at (760) 739-6675 or email@example.com.