California home defaults down 40%
Californians are so used to bad economic news of late (the state's budget is, again, down a giant, black hole; Los Angeles is asking city employees to take 26 unpaid days off this year; and L.A. County is actually thinking about cutting back the "untouchable" County Sheriff's Department) that when we hear news that seems to be really good, we look at it with a hyper-skeptical eye.
And, yet, it would seem hard to find the negative in news from MDA Dataquick that lending institutions in the state started 40.2% fewer foreclosure proceedings against homeowners in California in the first quarter of 2010 than they did for the same period one year ago. A staggering figure by any measure.
In real numbers, this means that 81,054 notices of default (NODs) went out from January to March 2010 compared to a historic 135,431 from January to March 2009. NODs are the first step on the road to foreclosure filings by banks and other lending institutions.
And, yet, there is concern here that things may not be -- and probably aren't -- as simple as they might seem.
"Several factors are at play here and it's hard to know how they play into each other right now," says DataQuick president John Walsh, in a statement on the company's website.
"We are seeing signs that the worst may be over in the hard-hit entry-level markets," Walsh says, "while problems are slowly spreading to more expensive neighborhoods."
Perhaps one reason for the dramatic drop in the initiation of formal foreclosure proceedings is the fact, says Walsh, that "we're seeing some lenders become more accommodating to workouts or short sales....it's very noisy out there."
But, as the Los Angeles Times points out, another way to look at this is that foreclosures may only appear to be slowing in California because "banks are deliberately putting fewer homes on the market," the paper quotes experts as speculating.
"They may be a little bit reluctant to put homes on the market all at one time, " Moody's Economy.com housing economist Celia Chen tells the Times. "I also think the process is lengthy and there are many homes in the foreclosure process, and so the process may just be clogged up."
If this is all nothing more than a "masking effect," we will all know it soon enough when default cases and then foreclosure filings begin to skyrocket once again. But wouldn't it be nice if these numbers actually mean something far more significant than that? Wouldn't it be nice if these numbers mean that not only is there that light at the end of the tunnel at long last, but that whomever owns the stupid tunnel, is not likely to be foreclosed on?
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.