DEFAULT NOTICES ON DECLINE
By
Pat O’Brien, Realtor
Keller Williams Realty Coastal Valley
Central Coast Area 2nd Qtr 2010 2nd Qtr 2011
Santa Barbara County 499 489 -2.4%
San Luis Obispo County 359 345 -3.9%
Statewide 70,051 56,633 -19.2%
Recently as reported in the Santa Maria Times, ( Aug 27, 2011 issue) there
is a small decline in default notices both in Santa Barbara County and San
Luis Obispo County. The decline statewide is much more significant,
however. Statewide the decline is slightly over 19% lower than the previous
2010 figures.
Could this mean the worst is coming to a close? Many mortgage, real estate and
construction industries are cautiously optimistic about the decrease, and all are
hesitant to say it’s particularly significant. There are many factors that might
have caused a reduction in the numbers. Even though the notices of default are
declining they are still really high. The numbers do however reflect a decline of
57% from what they were in 2009. The number of notices issued in Santa Barbara
County in 2009, were 10 times higher than the notices filed in 2004. In San Luis
Obispo County those numbers were about 8 times higher than in 2004.
Many in the Mortgage industry acknowledge the fact that lenders are
taking their time and being more diligent about paperwork. Banks are
reluctant to foreclose because they don’t want to increase their “shadow
inventories” of homes. This can have a good and bad effect on the
homeowner who isn’t in default and may need to sell with a “regular
sale” when placing their home on the market.
Recently a new state law was passed, (July 15, 2011) which prevents
lenders from collecting the difference between the selling price and the loan
amount from homeowners. More homeowners may be more willing to try
a short sale and more lenders are willing to accept them in an effort to
decrease their volume of defaults. Now you can go into a short sale
knowing what the outcome will be. Before, no one really knew what would
happened to the borrower who had the debt forgiven in a short sale.
Fewer distressed homes for sale would increase the demand for new homes.
If this (decline) is a trend, or the start of a trend, that could be really good
news to the housing industry as a whole. Most don’t anticipate anything
“normal” for the industry until around 2014. This doesn’t mean it still isn’t a
good time to buy. Interest rates are at a record low and even if homes
continued to decline slightly over the next year the rates may go up creating a
higher payment for the new homeowner who waits.
Investors who are not feeling stable with the stock market can use their
resources to purchase a home at todays low values and capitalize on the
demand for rental housing. At today’s low prices it is cheaper to purchase
than to rent and also still considered a good long term investment. Many
lenders these days are “fixing up” their foreclosed inventory for a better
return, but that creates a better value for you and lower repair costs after your
initial purchase.
If you are considering buying or selling a home in the near future, I will be happy to
explore the possibilities with you. I can be reached directly at (805) 448-1000.
Pat O’Brien REALTOR®, e-PRO
Keller Williams Realty Coastal Valley
204 E. Enos Drive , Santa Maria, CA 93454
(805) 310-5113 office ~ (805) 448-1000 cell
email: patsobrien@aol.com
To search 1000’s of homes instantly go to
www.patobrienrealestate.com
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