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California Foreclosure Starts Slide Nearly 60 Percent

San Diego-based housing data tracker DataQuick reported this week that California foreclosure filings continued to decline in the third quarter as the housing sector continued to recover from the worst US recession since the 1930s. According to the report, foreclosure starts fell just over 20 percent from the 2nd quarter to the third, and were down a staggering 58.6 percent from the third quarter a year ago. Home seizures fell during the quarter, as well, as completed foreclosures in California reached their lowest level since 2006's 4th quarter.

Between July 1st and September 30th, lenders filed a total of 20,314 notices of default on California homeowners, marking the smallest total since the Homeowner Bill of Rights went into effect earlier this year. One factor having an impact of declining foreclosures is that home values have risen sharply in recent months. The median price for homes sold in California between July and September was $360,000, up more than 26 percent in year-over-year terms. Higher home values helped bring thousands of California borrowers out of negative equity status, meaning they owe less on the note than their homes are worth. Equity in a home opens up numerous options for struggling homeowners, including a short sale or refinancing, both processes that are difficult to come by for underwater borrowers.

In California, like elsewhere across the nation, foreclosure activity has been higher in poorer neighborhoods, where the sort of subprime lending that fueled the housing crash was more prevalent. Underscoring this trend, 0.0034 percent of California homes valued under $200,000 received a notice of default during the third quarter, whereas only 0.0022 percent of homes valued between $200,000 and $800,000 fell behind. That figure plummets when looking at homes valued over $800k, as less than 1 in 1,000 homes in that category was delinquent at some point during the quarter.

November 12, 2013