The Daily Transcript - Tuesday, February 2, 2010
Foreclosure filings in San Diego in January were down a combined 14 percent from December, according to the latest data from the county assessor’s office.
January 2010’s 3,008 notices of default (NODs) and trustee deeds filed were 31 percent fewer January 2009 and 37 percent down from January 2008.
NODs were down to 1,868 in January from 2,050 in December. The 9 percent decline marked the seventh month in a row NOD totals went down or were flat month to month.
Trustee deeds, which are filed as the last step in the foreclosure process, have been more volatile over the past few months.
After a 27 percent increase in trustee deeds from November to December, there were 1,140 trustees deeds filed in January -- a 20 percent decline in the number of foreclosures recorded from December.
However, January 2010 had 14 percent fewer foreclosures than the same month a year ago.
In a sense, the numbers are positive, said Alan Nevin, director of economic research for MarketPointe Realty Advisors, but the low number of foreclosures could pose a problem.
“First all, we desperately need more foreclosures because the Realtors need more inventory to sell and buyers need homes to purchase,” he said. “We have far more demand than supply.”
Alan Gin, professor of economics at the University of San Diego, agreed, saying the combination of fewer foreclosures on the market combined with a lack of new-home construction over the past three years would likely cause constraints on inventory.
“Prices have already been inching up, but construction is virtually dried up and, pretty soon, if we continue to see the decline in foreclosures, it’ll cause prices to start rising,” he said.
Gin said he does not expect prices to rise as fast as they fell, partially because move-up buyers who have been waiting to sell will be more likely to put their homes on the market, adding to inventory levels.
Some industry observers have mentioned “shadow” inventory, or distressed homes that have not been released for sale by banks or other lenders. However, Nevin said there is no need to worry about a glut of properties suddenly flooding the market.
Nevin said most banks would have wanted to release their distressed properties on the market since it would negatively affect their capital ratios.
However, since government entities Fannie Mae, Freddie Mac, the FHA and VA control about half the nation’s mortgages, Nevin said they are not pressured to release their distressed assets.
"They're very much afraid that if they dump a huge amount of properties at once it could hurt prices -- that thinking makes sense for other locales, but not here," he said.
