Buying & Selling: California Defaults On The Rise

California is often seen as the bellwether for real estate trends--as prices go up there, so too may they for other parts of the country. And just as true, when foreclosures and defaults rise there, everyone gets worried:

Default notices jumped 145% in the last three months of 2006, accelerating a trend that began in late 2005 as home sales started to cool. It was the largest number of default notices in any three-month period since 1998.

Calculated Risk analysed the DataQuick numbers, and found little reason for comfort: 2006 had the highest number of NODs since 1998. And it now appears 2007 will see record or near record NODs.

Despite some comments in the article, this is very much a reason to worry, as Kevin Drum notes, the national foreclosure rate is matching the previous housing bubble bust of the early '90s. And with the much-anticipated "hitting bottom" still very far away, and thousands of ARMs ready to reset throughout 2007, there is every possibility that this bust will surpass the previous one by a huge margin in terms of sheer economic damage.

Posted at January 25, 2007 03:16 PM

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California is often seen as the bellwether for real estate trends--as prices go up there, so too may they for other parts of the country. And just as true, when foreclosures and defaults rise there, everyone gets worried: Default notices jumped 145% in the last three months of 2006, accelerating a trend that began in late 2005 as home sales started to cool. It was the largest number of default notices in any three-month period since 1998. Calculated Risk analysed the DataQuick numbers, and found little reason for comfort: 2006 had the highest number of NODs since 1998. And it now appears 2007 will see record or near record NODs. Despite some comments in the article, this is very much a reason to worry, as Kevin Drum notes, the national foreclosure rate is matching the previous housing bubble bust of the early '90s. And with the much-anticipated "hitting bottom" still very far away, and thousands of ARMs ready to reset throughout 2007, there is every possibility that this bust will surpass the previous one by a huge margin in terms of sheer economic damage.