The housing market is approaching normalcy.
Trustee deeds in San Diego are down 37.9 percent from January 2012, and notices of default are down 67.6 percent from this time last year, according to the San Diego County Assessor's Office.
“The answer is, that’s almost normalcy. In other words, in a perfectly decent economy, the numbers would be pretty close to that,” said Alan Nevin, principal at The London Group.
Trustee deeds -- the final step in the foreclosure process, transferring ownership from the delinquent borrower back to the lender or to a third party -- were filed on 484 properties in January, 8.8 percent more than in December and 37.9 percent less than January 2012, according to the San Diego County Assessor's Office.
Notices of default (NODs) -- which initiate the foreclosure process by registering that a borrower is in arrears of payment -- fell 49.4 percent from December to January, and 67.6 percent from January 2012 to January 2013.
Lenders issued NODs to 495 borrowers in January, down from 978 in December and 1,530 in January 2012.
Because the numbers are reaching a normal market, those big percentage drops may be less common, said Alan Gin, professor of economics at the University of San Diego.
The NODs are the numbers to watch, Nevin said, because foreclosures have been going down substantially due to an increase in short sales -- and the number of distressed sales hasn’t gone down dramatically when combining trustee sales with short sales.
“The blessing is that the economy has turned around. We gained 20,000 jobs last year and we’re going to do that again this year -- and that means more households will be created and some portion of those households will buy,” Nevin said. “And of course what everyone is finding now is that the inventory of available homes is negligible, driving up prices and will continue to drive them up all through this year.”
The economy and the housing market “reinforce one another,” Gin said. With higher employment, more people are able to take out a mortgage, and higher prices mean fewer people underwater.
“The housing market is improving. The economy is improving,” Gin said. “The economy is improving, which helps the housing market. The housing market improving also boosts the economy -- there’s more employment in construction, real estate industry and people feel better now. They’re more confident, they feel wealthier because the values of their homes are going up.”
In 2012 and in 2013 home prices have been accelerating, Nevin said, bringing underwater homeowners above water.
“In 2012, the average home price increase on a per-square-foot basis in this county was 9.4 percent, and it’s going to do that again this year. And when it does, it pretty much means that most folks that have a home here will once again have at least a break even and in many cases people will really have equity in their homes,” Nevin said.
In a market with little inventory and more buyers than sellers, the rising home prices could make 2013 a “pivotal year,” Nevin said.
“This is a very pivotal year because I think the home prices are going to go up enough so that the investors will start unloading their inventory and taking their profits,” Nevin said. “And in this county, 21 percent of all single-family homes are investor owned and 43 percent of condominiums. As those investors start taking their profits, that will loosen up the inventory, which is great because there are still far more buyers than there are inventory.”
This could cause the trade up market to pick up, which has already started in North County, where sales of homes priced at more than $600,000 are going “quite well,” he said.