By THERESA GRANT
Broker, Theresa Grant & Associates Real Estate Partners
Recent data indicate a significant rise in foreclosure activity across California in 2023, marking an alarming trend in the state’s real estate sector. While many economic experts caution that the rise is against the pandemic years, during which a moratorium was in place against foreclosure filings, we are beginning to see a statewide impact as we resume normal pacing.
The most affected counties include Los Angeles, San Diego and Orange, contributing significantly to the state’s rising foreclosure numbers. Despite these increases, California’s foreclosure rate remains comparatively low at a rate of 1 in every 4,244 households as of March 2023, versus the national average of 1 in every 1,217 households.
The upward trend continued into the third quarter of 2023, with the U.S. witnessing 100,546 properties with foreclosure filings, an 8-percent increase from the previous month and a 15-percent rise from September 2022. Foreclosure starts on 68,961 U.S. properties were recorded in this period, approaching pre-pandemic levels.
Notably, Los Angeles is among the metropolitan areas with the highest foreclosure starts among all counties in California, with a total of 1,885 foreclosure starts in the first quarter of the year. This was followed by San Diego County with 1,007 starts, Orange County with 836, Riverside County with 701 and San Bernardino County with 659 according to California Foreclosure Data. However, when considering foreclosure rates per housing unit, a different set of counties emerges as having the highest rates in California. The counties with the most foreclosures per housing unit, in descending order, are Glenn, Sutter, Lake, Merced and Trinity.
Experts attribute the rise in foreclosures to a combination of escalating interest rates, surging housing prices, inflation and job losses or restructuring. These factors collectively create a challenging environment for homeowners, particularly in a state already grappling with high living costs. Additionally, the state’s significant number of investment properties further exacerbate the situation. Investment properties such as long- and short-term rentals, often reliant on rental income to cover mortgage payments, are more susceptible to foreclosure in economic downturns.
Historically, California has consistently been among the top states in the U.S. for foreclosure filings. In 2021, it had the third-highest foreclosure rate in the nation, although this was a decrease from previous years. California’s non-judicial foreclosure process, which allows lenders to foreclose on properties without court proceedings, expedites the foreclosure process but reduces legal protections for homeowners.
As the foreclosure trend continues, it serves as a stark reminder of the economic pressures facing California residents and the importance of addressing the underlying causes to stabilize the housing market and protect homeowners.
If you’d like to learn more about the current local market conditions, explore available options or subscribe to local market statistics that you can follow at your own pace, reach out to Theresa Grant, Real Estate Broker (DRE #01202881) at Theresa@HomesInLakeArrowhead.com. You can also follow her on Instagram, @theresagrantrealtor, and YouTube, @theresagrantrealtor.
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