San Diego home foreclosures slowed in January this year, but more foreclosures are expected in the coming months because of the high percentage of defaults in the final quarter of 2009.
According to Chicago credit information provider TransUnion, 9.9 percent of homeowners with mortgage loans in San Diego County were in default by at least 60 days in the last quarter of 2009, a much higher percentage than the 6.2-percent rate in the same quarter in 2008 and far above the 1.5-percent average in the earlier part of 2007.
The average mortgage loan in San Diego in the October-December quarter was $379,271, around $10,000 lower than the average in the first months of 2007. Since the home sales price median in the same quarter was $325,000, most homeowners were clearly underwater.
Analysts said most borrowers in default would likely fall into foreclosure and ultimately see their houses go into home listings because of the difficulty in coming up with more money to pay the arrears. For a 30-year fixed-rate $379,000 mortgage loan, the monthly payment is around $2,034, so homeowners in default by more than two months need to come up with more than $6,000 to pay their arrears including the current month.
In January this year, the pace of San Diego home foreclosures slowed, dropping from 1,515 completed foreclosures in December 2009 to only 986 completed foreclosures in January. But the number of defaults held steady, at 1,741 default filings.
Similarly, the pace of home foreclosures in California also slowed, posting a foreclosure rate 10.8-percent lower than the rate in December 2009. A total of 71,817 households across California were hit with delinquency or foreclosure notices in January.
Based on the TransUnion data, the default rate of California in the final quarter of 2009 was 11 percent, much higher than that of San Diego and far above the national average of 6.9 percent.
According to Norm Miller, a CoStar Group top executive who teaches at the University of San Diego, said that the distress rate in California will likely peak at 12 percent while that of San Diego will peak at 11 percent and that the housing crisis will ease in about two years.
In January, the data on San Diego home foreclosures showed shifts in neighborhoods where foreclosures were concentrated. Previously battered communities, such as Golden Hill and National City showed decreases while stronger neighborhoods like Santee, Pacific Beach, Mission Beach and Lakeside showed increases in foreclosures.