Notices of default fell 13.8 percent while trustee’s deeds increased 17.1 percent from March to April, according to statistics from the San Diego County Assessor. Although trustee deeds increased from a two-year low of 844 to 988, the number is still well below the 2008 average. Conversely, the 3,673 notices of default, or NODs, filed in April were the third highest total to date, coming off two months of consecutive highs.
Foreclosure moratoriums toward the end of 2008 are the likely cause of both trends. The moratoriums led to a slowdown in notices of default from September to November 2008. Many NODs filed during that time period have worked their way through the typically 90-day foreclosure process, resulting in them becoming trustee’s deeds.
Trustee’s deeds are the last step in the process before a home becomes bank owned.
Year-to-date, the number of NODs filed in 2009 are outpacing 2008 by 10 percent. There have been 14,693 filed this year.
There has been an 18 percent decline in trustee’s deeds year-to-date from 2009, however, with 4,522 filed since January.
The lower number of trustee’s deeds resulted in one of the lowest inventory totals in months, said Alan Nevin, director of economic research with MarketPointe Realty Advisors. That, coupled with a recent surge of offers coming in for lower-priced homes, could cause an eventual spike in pricing.
“At some point, and I wish I could give you the date, but there is going to be a couple of major jumps in price,” he said. “It’s not going to be a matter of homes creeping up $5,000 or $10,000, there’s going to be a couple of $50,000 adjustments as soon as we officially run out of REOs (real-estate owned homes). And it doesn’t take long to do that.”
Nevin said he could not project when exactly the spike could occur, but said it is inevitable as the demand grows for a shrinking supply.
However, the large number of NODs could lead to an increased number of foreclosures within a few months. But San Diego State University professor of Real Estate Leonard Baron said he hopes banks will be able to modify loans of distressed homeowners.
“The banks are going to try not to force people into foreclosure, which, again, completely wastes everyone’s money,” he said.