California Leading U.S. Out of Housing Bust: Mortgages | Armonk NY Real EstatePosted on October 12th, 2012 No comments
Orange County, home base for defunct subprime lender New Century Financial Corp., had the highest median price of the six Southern California counties in August, rising 6 percent from a year earlier to $445,000, according to DataQuick. San Francisco led northern counties, up 13 percent to $700,000.
Bulk-buying of foreclosure properties by firms such as Colony Capital LLC and Carrington Holding Co. LLC has soaked up some of the housing excess in inland counties, said O’Toole, of Discovery Bay, California-based Foreclosure Radar.com.
In Antioch and Vallejo in northern California, and Riverside in the south, homes that sold for $400,000 at the peak have been purchased for about $130,000 each and renovated for the rental market, Gary Beasley, managing director of Oakland, California-based Waypoint Real Estate Group LLC, said in an interview.
The mortgage industry, which lowered underwriting standards to increase loan volume and fuel price gains, used so-called robo-signers to handle the flood of foreclosures that followed.
The country’s top banks, including JPMorgan Chase & Co. and Bank of America Corp., agreed to a $25 billion settlement in February after attorneys general in 49 of 50 states participated in a probe of fraudulent paperwork used to repossess homes.
Driving the recovery in California has been the relative speed it has worked through foreclosures, in part because home repossessions there don’t require judicial review as they do in about half of U.S. states, said Ivy Zelman, CEO of Zelman & Associates LLC. There are 24 non-judicial states, according to RealtyTrac.
A new California law that goes into effect Jan. 1 may make it harder for lenders to seize property, which could delay the clearing of distressed homes and a swifter statewide recovery, Blomquist, a RealtyTrac vice president, said in an interview.
“We’ve been seeing a downward trend in new defaults, while the market in California is gradually improving,” said Blomquist. “The danger is that the law will delay foreclosures in the short-term, and be followed by a spike down the road.”
Investors may already be getting out of the market after California’s housing gains. Insight Capital Research Management Inc., which had $360 million under management as of June 30, has scaled back positions in homebuilders, including those with heavy California exposure, said Mike Ashton, portfolio manager with the Walnut Creek, California-based fund.
Even in the Vallejo/Fairfield metropolitan area, which had the highest U.S. foreclosure rate in September at one filing for every 202 households, California’s relative housing value is on display. The average foreclosure property there cost $187,939, compared with the U.S. average of $170,040, RealtyTrac said.via businessweek.com