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O.C. BUSINESS PLUS | HEARD ON THE BEAT / REAL ESTATE

Like a Textbook Example, O.C.'s Default Rate Dips as Home Prices Rise

February 20, 2001|DARYL STRICKLAND

Rising home values have helped prevent distressed homeowners from falling deeper into debt and from finding their credit further ruined by repossession.

The number of Orange County households entering the first stage of default on home loans declined 17% to 857 in the fourth quarter from 1,031 a year earlier. For the year, the number receiving a notice of default fell 18% to 3,956 from 4,830 in the previous year, according to Dataquick Information Systems Inc., a La Jolla research firm.

Conventional wisdom is that the steeper home prices rise, the faster foreclosure activity declines. Although there always will be people on the brink of going broke because of divorce, layoffs, or overspending, the current numbers are about as low as they can get, said John Karevoll, an analyst who compiled the report.

"I don't think we'll see as much decline this year as before," he said.

In Orange County last year, the price of a typical home jumped to a record $271,000, rising by 13% over the previous year, Dataquick found. A similar rise in values has taken place across California, where the median price, meaning half cost more and half cost less, rose 13% to $209,000 last year.

With prices surging, the number of households entering foreclosure proceedings statewide has been declining since 1997. A total of 88,666 foreclosures took place last year, compared to 101,053 the previous year.

Moreover, the only two counties of 58 statewide that recorded an increase in foreclosures last year were Madera and Bakersfield in the Central Valley. Agriculture recorded less growth last year than manufacturing, high-tech or other sectors, Karevoll said.

Daryl Strickland covers real estate for The Times. He can be reached at (714) 966-5670 and at daryl.strickland@latimes.com.

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