We’re just going to pretty much parrot what we wrote three months ago: While a 102.4% year-over-year increase in San Francisco Q2 “Notice of Default” activity sounds quite dramatic, in absolute terms it still represents relatively few properties (257). Within the greater Bay Area, however, Contra Costa hit a record level of Q2 default activity (2,316 notices, up 219.4% year-over-year) as did Sacramento (3,840 notices, up 184.0% year-over-year). And Alameda isn’t too far behind (1,612 notices, up 148.4%).
According to DataQuick, “[m]ost of the loans that went into default last quarter were originated between July 2005 and August 2006. The median age was 16 months. Loan originations peaked in August 2005. The use of adjustable-rate mortgages for primary purchase home loans peaked at 77.8% in May 2005 and has since fallen.”
And while the actual number of foreclosed upon homes in San Francisco jumped a whopping 444.4% last quarter (on a year-over-year basis), that represents a total of 49 properties (versus 9 in the second quarter of 2006). In Contra Costa, however, 778 homes were foreclosed upon last quarter (versus 62 in the second quarter of 2006).
Keep in mind that long-term interest rates remain near historic lows, and according to most, the Bay Area economy and stock market remain strong (and incomes are up).
UPDATE: As a reader notes below, some great perspective from the Chronicle with regard to the relative number of Bay Area defaults/foreclosures over the past twenty (or so) years. In summary: we’ve already surpassed the early 90’s.
∙ Bay Area “Notices Of Default” Heading North? (So To Speak) [SocketSite]
∙ California Foreclosure Activity Continues to Rise [DQNews]