Nine Northern California counties reported rising foreclosure rates, Foreclosures.com announced today, with Contra Costa and Alameda counties leading the pack. Contra Costa County saw a 26 percent increase in foreclosure filings from the first quarter to the second quarter of this year, followed by Alameda County with a 22.6 percent rise.
Foreclosure activity in Southern California, meanwhile, has been cooling. Filings dropped 3.3 percent in Los Angeles County, about 17 percent in Orange and San Bernardino Counties, and also fell about 10 percent in Riverside County, reported Alexis McGee, president of Foreclosures.com, an investment advisory firm based in Fair Oaks, Calif.
“We expect the Southern California trend to reverse in the near to intermediate future,” McGee said. “We have the combination of rising interest rates and very high housing cost to income ratios, especially in Los Angeles, Orange County and San Diego, and that mix is putting pressure on overextended homeowners there.”
As of April, Los Angeles also had a year over year net loss of 6,800 payroll jobs, and an unemployment rate of 5.4 percent, according to industry consultant John Burns of Irvine, Calif. “When you get several negatives at work simultaneously, you tend to get a synergistic effect. We think southern California foreclosures are bound to increase again,” McGee said.
Increased filings in the seven other Northern Counties ranged from Stanislaus County with a 10.5 percent increase in Stanislaus County to an almost 19 percent increase in San Francisco and San Mateo counties. Combined numbers for Sonoma and Marin counties registered the only Bay Area decline, with filings at 85.3 percent of the first quarter pace.
San Jose, Calif., has experienced a year-over-year loss of 17,300 payroll jobs, and has a housing cost to income ratio of more than 50 percent. “Those numbers are helping to produce almost 1,300 mortgage defaults in Santa Clara County in the first quarter of 2004, and over 1500 in the second quarter,” McGee also reported.
On the East Coast, the New York City unemployment rate is at 7 percent, which is well above the national average, and New Yorkers were paying 42.5 percent of their incomes to service their home loans at the start of the year. “Households paying more than 40 percent of their income for their mortgages are very vulnerable,” McGee said. “Even a temporary dislocation in their income situation could quickly lead to a default.”
In Queens, there were about 1,650 new cases of filings against homeowners in default in the first two quarters of the year, and 1,325 cases in Kings County, N.Y.
And in the Phoenix, Ariz., metro area, new notices of trustee sales of homes in foreclosure in Maricopa County totaled 3,246 for the second quarter of 2004 and foreclosure activity is about 50 percent above the same period last year, despite some improving economic numbers in the region. With 45,300 new jobs over the last 12 months, unemployment down to 4.4 percent, and projected personal income growth of 7.6 percent, McGee said that Phoenix area foreclosure activity should begin to recede. “It never goes away completely,” she said, “because death, illness, divorce and unexpected job loss never go away.”
Foreclosures.com has been publishing pre-foreclosure lists and assisting investors on its Web site for more than 12 years. The company covers 18 California counties, the metro areas of Las Vegas, Phoenix, Chicago and New York, and all of New Jersey.
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