Nearly 900 Californians a week are losing their homes because they can't afford to pay the mortgage -- up from about 100 a week a year ago -- providing fresh evidence that the housing market's troubles are nowhere near over.
The surge is raising concerns that home prices will soon suffer as a result. The 11,033 foreclosures in the first three months of the year represent an 800% increase over the same period a year earlier.
In addition, 46,760 homeowners were sent default notices in the first quarter, DataQuick Information Systems reported Monday. A default notice is a warning from a lender to catch up on payments immediately or face eviction.
Foreclosures and default warnings are at their highest points in nearly a decade, the La Jolla-based real estate data tracker said.
So far, the effect on home values has been muted. But as the number of move-outs, evictions and forced sales continue to increase, some economists say they will soon start to push prices down.
First to fall will be the low-income communities where marginal loans proliferated, they say. The trend will spread like a virus to more affluent neighborhoods.
The most pessimistic think a housing bust will wound the economy.
"For this rise in foreclosures to be happening in the midst of a strong labor market is truly unique and scary," said analyst Christopher Thornberg of Beacon Economics.
He predicts foreclosures will top out at four or five times the current level -- enough, he says, to either induce a recession or at least bring the economy to the precipice.
Other experts aren't exactly optimistic but believe that the situation is more ambiguous. They say the state's low unemployment rate of 4.8% and generally healthy economy will absorb trouble, up to a point.
"My gut is the correction we are seeing is regional and very spotty," said Patrick Veling, president of Real Data Strategies in Brea.
Generally, the places with the cheapest housing in the state -- including the Inland Empire and Central Valley -- are faring the worst.
In Riverside and San Bernardino counties, the combined volume of foreclosures rose to 2,369 in the first quarter from 255 in the same period last year. The Central Valley, which includes Sacramento County, jumped to 3,039 from 286.
Another problem spot is San Diego County, where the 1,183 foreclosures is the highest since DataQuick began tracking this information in 1988. The county's market peaked earlier than the rest of the state.
