Both San Diego and Los Angeles — among other major markets across the country — have been experiencing a rise in home-loan foreclosure starts over a number of months, according to a report from ATTOM Data Solutions. Each market saw a 20 percent increase in foreclosure starts during July as part of a multi-month trend that goes against the national trend of decreases up until July, the firm reports.
SoCal Real Estate reached out to Daren Blomquist, SVP of ATTOM Data Solutions, to discuss the causes behind the SoCal markets’ rising foreclosure rates in July. He tells us, “First it’s important to note that San Diego foreclosure starts in 2017 were at their lowest level since we began tracking in 2006. What we’re seeing in 2018 is that foreclosures hit bottom in 2017 and are starting to rise again as gradually looser lending has returned to the market over the past few years.”
Additionally, Blomquist tells us, borrowers have had to stretch themselves more financially to afford a home in San Diego as home prices are at an all-time high and affordability is at a 10-year low. “When we dig into the foreclosure numbers broken down by loan type and loan vintage, we see a marked uptick in foreclosure rates on FHA loans starting with the 2014 vintage — both nationwide and San Diego.”
While nationwide foreclosure starts in July increased less than 1 percent from July 2017, the report says, this represents the first year-over-year increase following 36 consecutive months of decreases. However, a number of local markets have been experiencing much more severe rises in foreclosure starts over several months, says ATTOM Data Solutions.
According to a representative of the firm, “A total of 96 out of 219 metropolitan statistical areas analyzed in the report (44 percent) posted year-over-year increases in foreclosure starts in July, and in many of those markets the July increase was not just a one-month anomaly.” These markets and their July increases include Miami (29 percent); Houston (76 percent); Jacksonville, Florida (81 percent); Orlando (41 percent); Detroit (71 percent); Minneapolis-St. Paul (32 percent); Indianapolis (107 percent); Austin, Texas (29 percent); and Cape Coral-Fort Myers, Florida (59 percent). Houston saw a 153 percent increase in foreclosure starts since May.
Interestingly, San Diego’s rise in foreclosure starts runs counter to the employment figures for the region. A representative of San Diego Regional Economic Development Corporation reports that the unemployment rate for the San Diego region is a mere 3.5 percent, and a representative of San Diego Workforce Partnership reports that the region added 9,000 people to the labor force in July, 3,400 of them in the professional-and-business-services sector.
As we reported as recently as April, both ATTOM Data Solutions and CoreLogic were reporting positive trends in the housing market, with the number of national foreclosure filings and the number of mortgage delinquencies still declining on a year-over-year basis. At that time, Blomquist said in a statement, “[W]e are beginning to see early signs that some post-recession loan vintages are defaulting at a slightly elevated rate, a sign that some loosening of lending standards has occurred in recent years. Consequently, foreclosure starts are trending higher compared to a year ago in an increasing number of local markets — some of which are a bit surprising given the overall strength of housing in those markets.”