Experts: Downward trend should help stabilize home pricesForeclosures across the Coachella Valley plummeted 36percent in September to the lowest level since February 2008.
The 1,031 mortgage default notices, bank repossessions and foreclosure auctions in September also marked the sixth straight month of double-digit year-over-year declines.
That compares to 1,604 in September 2010, Irvine-based real estate data provider RealtyTrac reported. February 2008, meanwhile, saw about 940 filings.
As foreclosure filings continue to tumble and bargain hunters snap up the dwindling inventory of bank-owned and other distressed properties, home prices should continue to stabilize.
Franklin, president of the Palm Springs Regional Association of Realtors.
“If you look at the (September) price per square foot of bank-owned properties at $93 and regular sales of $161, you can see where this is going,” Franklin said. Michael McDonald, partner with real estate information company Market Watch LLC, anticipates that distressed property inventory in many valley cities will drop to normal levels sometime in 2013, if not sooner.
McDonald predicts median prices could then rise 20 percent or more, “further slowing strategic defaults and unfreezing thousands of marginal equity homeowners.”
Experts who track foreclosures nationwide, however, as well as desert bankers, caution that the downward trend in foreclosures could come to a screeching halt.
“I expect to see an uptick in foreclosure activity and inventory over the coming months,” said Bret Cohn, senior vice-president of Franklin Loan Center in Palm Desert.
One reason is because loan modifications offered by many banks merely lowered the interest rate for five years, with delinquent payments applied to the back end of the loan, Cohn said.
“This does not help a homeowner when it will take 20-plus years to get back to the value which they owe,” Cohn said.
“Most people who accepted loan modifications realized within a few months that it was not in their best long-term financial interest to continue on this path, and they have already stopped making their modified payments.”
Fewer distressed properties, tooIn the Coachella Valley, 1,031 foreclosure filings in September was far less than in mid-2009, when there were often 2,200 or 2,300 filings in a month
Such a decline has helped push down the number of bank-owned and short-sale properties on the market, according to local Realtors and the Desert Area Multiple Listing Service.
In short sales, homeowners work with lenders to sell their properties for less than what is owed on the mortgage.
Bank-owned properties for sale during September fell to 424 in the valley, according to the latest MLS report, while another 274 sold during the month and 322 sales were pending,
That compares to September a year ago, when 694 bank-owned homes were for sale, another 284 sold and 286 sales were pending.
There also were far fewer short sale properties on the market in September.
For house hunters Allan and Meghan Carty of Petaluma, the drop in foreclosure filings affects them less than the drop in foreclosure inventories as they look for a four-bedroom, three-bath in or near Indio.
They've seen bank-owned properties priced at $118,000-$234,000, deals they couldn't have imagined five years ago.
“It seems like there are some pretty decent options,” Allan Carty said. “We want to find something before all the best ones are gone.”