Report: Foreclosure Activity Below Pre-Recession Levels

A new real estate report finds that California foreclosure activity continues to stay below the pre-recession average. 

The numbers come from RealtyTrac. Daren Blomquist with the research firm says just over 28,500 properties received foreclosure filings in the first-quarter of this year.

"That may sound like a lot," says Blomquist. "But actually it's back to what we were seeing before the recession hit, on average, in 2006 and the first three quarters of 2007."

He says the pre-recession average was 46,000 properties. This isn't the first time the state has dipped below that number. It also happened in the second-quarter of 2013. 

"The numbers seem to be evening out now," says Blomquist. "I think it's a reaction to the excesses of the housing bubble, is that lending is much tighter now."

Blomquist says first-quarter foreclosures in the state were down by 15 percent from the same period last year.

Meanwhile "foreclosure starts," or the beginning of the foreclosure process, increased in California by 31 percent from February to March. It was also up by 13 percent from the last-quarter of 2015 to the first-quarter of this year.

"There's a little bit of a concern there," says Blomquist. "But those increases that we're seeing right now are really more a one month anomaly."

He says banks are getting ready for the spring selling season.

"They think like any other seller knowing that a good time to sell these properties they're foreclosing on would be in the next few months," says Blomquist. "And so they're pushing through more properties in the foreclosure pipeline."

The overall annual foreclosure rate, which includes default notices, auctions and bank repossessions, fell by 10 percent in March.

The Sacramento area foreclosure activity continues to decline. Blomquist says 2,000 properties received a foreclosure filing in the first-quarter of this year.

"Compared to back in 2006 and 2007, the average quarterly number of foreclosures in Sacramento was over 4,400," says Blomquist. "So we're less than half of what we were seeing prior to the recession in terms of foreclosure activity in Sacramento."

Blomquist says foreclosure activity in the first-quarter is down 21 percent from the same period last year. Sacramento now has the 83rd highest foreclosure rate in the country out of the 200 metro areas analyzed. 

RealtyTrac's nationwide survey of real estate markets finds first-quarter foreclosure activity in the San Joaquin Valley town of Merced was 95 percent below peak levels. That's the largest drop in the country. 

"We only saw 178 properties with foreclosure filings in Merced in the first-quarter of 2016," says Blomquist. "At the peak in Merced we had seen almost 3,600 properties with foreclosure filings and that was back in the second-quarter of 2009 in Merced."

Stockton was the only other California city that saw first-quarter foreclosure activity around 90 percent below peak levels.