SAN DIEGO — The number of California homes entering the foreclosure process plunged to a more-than-seven-year low this year thanks to rising home prices, an improving economy and new laws designed to protect homeowners, a research firm reported April 23.
From January to March, 18,567 default notices were recorded by lenders — down 51.4 percent from the previous three months and down 67 percent from the first quarter in 2012, DataQuick said.
It was the lowest figure since the fourth quarter of 2005.
"Foreclosure starts were already trending much lower late last year because of rising home prices, a stronger labor market and the settlement agreement between the government and some lenders," DataQuick President John Walsh said in a statement. "But it appears last quarter's drop was especially sharp because of a package of new state foreclosure laws — the Homeowner Bill of Rights — that took effect Jan. 1."
However, Walsh also said that default notices have ticked up in recent months and an increase is possible this year "if lenders need to play a lot of catch-up."
The median sales price for a California home last quarter was $297,000, up 22.7 percent from a year ago, DataQuick reported.
"Rising home prices will be key to the final mop-up of the foreclosure mess," Walsh said. "As values rise, fewer people owe more than their homes are worth, and more people can refinance into a more favorable loan. It also means more who fall on hard times can sell their homes for enough to pay off the loan."
Most of the loans going into default were from the period of 2005-2007, and homes where the median sales price was below $200,000 saw a much greater rate than more expensive homes.
Among the state's larger counties, loans were most likely to go into default in Riverside, San Bernardino, Solano and San Joaquin counties. They were least likely in San Francisco, San Mateo, Santa Clara and Marin counties, DataQuick said.
The dip in foreclosure activity appears to be part of a general trend as the U.S. housing market improves.
The number of U.S. homes repossessed by lenders fell 3 percent in March from the previous month and was down 21 percent from a year earlier, foreclosure listing firm RealtyTrac Inc. reported earlier last month.