June 13, 2007

Foreclosures: Valley leads nation

We're worst in the nation. That's what home mortgage foreclosure statistics reveal for the Northern San Joaquin Valley.

The region's foreclosure rates were nearly seven times higher than the national average in May, according to data gathered by RealtyTrac.

San Joaquin County had the highest percentage of properties in default on their mortgages. Merced County was second-highest. Stanislaus County was third.

"I'm surprised at how high your foreclosure numbers are. They've really jumped," said Daren Blomquist, spokesman for RealtyTrac, which publishes a national database of properties facing foreclosure. "You've got an exponential increase."

That's for sure.

Just two years ago, foreclosures in the valley were virtually unheard of. Now they're a daily occurrence.

For example: In Stanislaus County during May 2005 there were just 78foreclosure filings, most of which were notices of default, which is the first step in the process. This May, those filings skyrocketed to 1,278. That's more than 16 times higher than two years ago.

Merced County foreclosure filings are a whopping 31 times higher, rising from 22 two years ago to 688 last month.

San Joaquin County filings are 18 times higher, rising from 120 to 2,157.

By comparison, nationwide foreclosure filings are 2.4 times higher than two years ago.

The vast majority of homeowners who enter the foreclosure process traditionally have been able to get out of it without losing everything. They could refinance their mortgages or sell their homes before the bank took over.

That's no longer the case. Statistics from RealtyTrac show massive jumps in the number of homes being repossessed by lenders.

"People have gotten into home mortgages that stretch them too thin," Blomquist said. "They were anticipating home values continuing to go up, so they could bail themselves out by selling or refinancing. But the market is not cooperating now."

Homeowners these days often owe more than their homes are worth, so there's no easy way to escape their mortgage burden. As a result, increasing numbers of homeowners who fall behind on payments are having their homes taken over by lenders.

Last month in Stanislaus County, 162 homes were repossessed. In May 2006, no homes were lost that way.

Lenders have taken over so many homes, in fact, that they're flooding the resale housing market with so-called distressed properties.

Forty-seven of those lender-owned homes will be put up for auction June 25 in Modesto, with starting bids as low as $89,000. That auction, by the Real Estate Disposition Corp., has many starting prices at less than half the home's previous value.

"Those auctions are an indication that lenders are more desperate to get rid of those (repossessed) homes," Blomquist said. He said buyers are getting harder to find. "A lot of investors are very gun-shy about getting into this market right now."

Homeowners are having a hard time finding any kind of buyer.

Only 774 homes have been sold in Modesto this year compared with 1,548 at the same time last year, according to the Central Valley Association of Realtors.

New home sales also have plummeted. In Stanislaus County, only 82 new houses sold this April compared with 212 in April 2006, according to the California Building Industry Association.

And home values continue to fall.

The Realtors association reports that the median-priced Modesto home sold for $325,000. That's $18,000 less than at this time last year.

In Stanislaus County, new homes in April sold for a base price of $429,990, which was $16,000 less than last year, the building association reported.

Another sign of the real estate market's troubles is the rising rate of delinquent property taxes.

In Stanislaus County, nearly 7.7 percent of landowners have yet to pay their 2006-2007 property taxes, which were due in April. Tax Collector Gordon Ford said that delinquency rate is on track to set a record.

Many of the region's real estate woes are expected to be discussed today at the Valley Real Estate & Economics Conference at the DoubleTree Hotel in Modesto.

That conference will include sessions on what's ahead for the region's real estate market and investment opportunities. The event starts at 7:30 a.m.; tickets are $50 at the door.

staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.

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