San Diego County is no longer experiencing a foreclosure crisis, but the ripple effect from 2008 to 2011 is causing hardship for renters, as home prices rise and investors sell off the properties.
Trustee deeds — the final step in the foreclosure process, transferring ownership from the delinquent borrower back to the lender or a third party — were filed on 136 properties in July, 12.8 percent lower than in June and 33 percent lower than July 2013, according to the San Diego County Assessor's Office.
There are about 550,000 single-family detached homes in the county and about 190,000 condominiums, said Alan Nevin, director of economic and market research at Xpera Group, making 136 trustee sales an “irrelevant number.”
Notices of default, which begin the foreclosure process by registering that a borrower is behind in payments, rose 4.3 percent from June to July, and fell 21.8 percent from July 2013 to July 2014. Lenders issued notices of default to 508 borrowers in July, up from 487 in June and down from 650 in July 2013.
“One of the things I’ve stopped doing is looking at foreclosures,” Nevin said. “For a long period there, almost every one that defaulted actually went to a trustee sale. Now that’s not true. You may have 508 going into default, but maybe only one-quarter of them get foreclosed out.”
Those defaulted borrowers are either able to sell the property before it reaches foreclosure or have been able to refinance, Nevin said.
“They’ve managed to keep the homes, which is good, of course,” Nevin said.
Nevin said he expects “more of the same — or less of the same — I should say,” for the foreseeable future.
There were close to 200,000 units that were foreclosed from 2008 to 2011 and were bought typically by investors who rented them out, Nevin said.
“We had almost 40 percent of condominiums in this county get foreclosed on, which is an incredible amount,” Nevin said. “And now what’s going to happen — and we’re starting to see this because home prices have gone up — all those investors are kicking out the renters and selling [the properties] to owner-occupants.”
This is causing many people to need another place to rent, and they’re not finding it. There are plenty of apartments, Nevin said, but few homes to rent, and rental prices have been steadily increasing.
Rents have increased in the past year by about 20 to 30 percent in high-end areas such as Carmel Valley, and are up about 5 to 10 percent in the rest of the county, Nevin said.
“Even though the foreclosures have stopped in essence, the next round that evolved from that is of great economic significance,” Nevin said.
People who are kicked out of rental housing and unable to find the next rental can turn to buy a property, but there are waiting lists for those who want to buy a moderately priced condominium, Nevin said. He defined moderately priced as between $300,000 and $500,000.
“We’re seeing a crunch that hasn’t been recognized yet. We see it in the new rental product that’s coming online because they’re getting rents that had never been anticipated by the developer,” Nevin said.
This crunch will be eased when villages 8 and 9 in Otay Mesa open up, he said. The project is expected to introduce several thousand units destined for low-density, moderately priced housing, Nevin said.
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March 12, 2015 -- George Chamberlin speaks with Alan Nevin, director of economic and market research at Xpera Group, about the various market segments of commercial space around San Diego.
Aug. 6, 2014 -- George Chamberlin speaks with Ted Bumgardner, president of Xpera Group, and Alan Nevin, Xpera's director of economic and market research, about the housing and construction markets.
Dec. 11, 2013 -- George Chamberlin and Alan Nevin, director of economic and market research for Xpera Group, discuss the residential real estate market and construction of new homes.