SAN DIEGO (AP) -- Rising prices sent California home foreclosure activity to a six-year low in the fourth quarter, a real estate research said Wednesday.
There were 38,212 default notices on houses and condominiums in the state from October through December, down 37.9 percent from 61,517 notices during the same period of 2011, DataQuick reported. It was the lowest tally since 37,994 notices were filed during the fourth quarter of 2006.
Declines were steep across geographic regions and price categories, offering the latest evidence that the threat of foreclosure was fading fast.
California's median home sales price in December rose 20 percent from a year earlier, with the San Francisco Bay area gaining 32 percent for its steepest increase in more than two decades. John Walsh, DataQuick's president, said the rising values meant fewer homeowners owed more than their properties were worth, allowing them to sell to pay off mortgages or refinance at low interest rates.
It is a sharp turnaround from three years ago, when foreclosed homes flooded the market. According to DataQuick, properties that were foreclosed upon during the previous year accounted for 16.6 percent of existing-home sales during the fourth quarter, down from 33.6 percent a year earlier 57.8 percent in the first quarter of 2009.
"My investor clients are finding it far more difficult to find bargains in picking up distressed properties under market value," said Gary London, president of The London Group Realty Advisors in San Diego. "For the most part, that party's over."
"What characterized the recession were distressed sales," London said. "They were dictating the market. It was the market. It was the only market."
Short sales — when a sale price is below what is owed on the property — rose as lenders sought to avoid foreclosures as part of agreements they made with the government, DataQuick said. Short sales accounted for 26 percent of existing-home sales during the fourth quarter, up from 25.7 percent a year earlier.
Foreclosure activity remained concentrated in lower-priced areas, according to DataQuick. ZIP codes with median sales prices below $200,000 saw 5.5 default notices filed for every 1,000 homes, while ratio stood at 3.5 default notices in areas sales prices between $200,000 and $800,000 and 1.3 default notices in areas with sales prices above $800,000.
Default notices are the first step in the foreclosure process and a leading indicator. DataQuick said California had 21,227 residential foreclosures completed during the fourth quarter, down 32.4 percent from 31,260 a year earlier.
In another leading indicator that suggests foreclosures will continue to wane, the Mortgage Bankers Association recently reported that 6.56 percent of California home loans were at least one payment behind at the end of September, down from 7.68 percent a year earlier.