June 24 average daily rates in Orange County for 30-year fixed loans with one-point fee: Conforming up to 6.078%, Jumbo up to 7.446% and Conforming-Jumbo up to 7.208% (Note: conforming-jumbo rates are for loans from $417,000 to $729,750, while conforming is up to $417,000 -- both types are sold to GSEs. Jumbos here are $730,000 or higher and not sold to GSEs.)
Source: Newspaper Chart Services 
Is your neighborhood in foreclosure danger?
May 1st, 2008, 12:01 am · 16 Comments · posted by Matt Padilla, Register Reporter and Blogger
Growth in home loans entering the foreclosure process in Orange County is not exactly the same as where foreclosures have already occurred but it’s fairly close. In both cases, Santa Ana ZIP codes dominate.
DataQuick provided a full table of notices of default in the first quarter of this year, which you can see by CLICKING HERE. Below is a table with the 10 ZIPs with the highest growth rate of NODS from Q1-2007 to Q1-2008. (Notices of default are the first stage of foreclosures and typically filed by a bank after a borrower misses at least three monthly payments. Not all NODs end in foreclosure). To avoid a percentage gain from a tiny starting point, I made sure there were at least 20 NODS in each ZIP in Q1 2007 to create the table below. “NOD” in table is notices of default in Q1 ‘08.
| City | ZIP | NOD | change |
|---|---|---|---|
| Garden Grove | 92841 | 91 | 333% |
| Tustin | 92780 | 144 | 300% |
| Santa Ana | 92701 | 165 | 293% |
| Santa Ana | 92704 | 287 | 263% |
| Santa Ana | 92707 | 237 | 259% |
| Placentia | 92870 | 112 | 250% |
| Garden Grove | 92844 | 72 | 243% |
| Garden Grove | 92843 | 106 | 221% |
| La Habra | 90631 | 183 | 216% |
| Brea | 92821 | 66 | 214% |
And below are ZIP codes with the highest gain in foreclosures, with at least 10 foreclosures in the prior quarter.
| Community | Zip | Forec. | change |
|---|---|---|---|
| Santa Ana | 92707 | 99 | 482% |
| Anaheim | 92801 | 53 | 430% |
| La Habra | 90631 | 51 | 410% |
| Garden Grove | 92840 | 58 | 383% |
| Anaheim | 92804 | 107 | 365% |
| Santa Ana | 92701 | 51 | 364% |
| Anaheim | 92805 | 60 | 362% |
| Santa Ana | 92704 | 101 | 359% |
| Rancho Santa Margarita | 92688 | 52 | 333% |
| Santa Ana | 92703 | 59 | 321% |
Related links:
Orange County foreclosures, first quarter 2008
U.S. foreclosure filings rise 112% in a year
O.C. foreclosure intensity surpasses 1990s
Credit Suisse sees 6.5 million loans in foreclosure by 2012
Pace of O.C. foreclosures triples ’90s slump
May 1st, 2008 at 8:15 am
“Is your neighborhood in foreclosure danger”? LOL! NO neighborhood is in “Foreclosure danger” unless the homeowners STOP PAYING THIER MORTGAGES! People don’t do that and they are in NO danger whatsoever! I suppose a neighborhood of construction workers, gardners, realtors, and mortgage people would be “in danger” but as yet, your “average Joe” if he has a job, isn’t in any!
May 1st, 2008 at 9:26 am
I hope my Persian neighbors, who live next door to me, go into foreclosure.
Gold paint everywhere….. as much gold paint as possible on their house.
I’m going to put a copy of Architectural Digest in their mailbox.
May 1st, 2008 at 9:42 am
The “foreclosure danger” they’re referring to is the danger that if too many houses go into foreclosure in your area, the desireability of your house goes down. Vacant houses are not maintained, can be boarded up, and attract vagrants.
May 1st, 2008 at 9:45 am
Any “Average Joe” can lose their job by being laid off. Just wait until it happens to you and see how hard it is finding another job right now that can pay all of your bills. But of course, that wouldn’t happen to YOU, right? Well, there’s always a chance that it will.
May 1st, 2008 at 9:51 am
I agree with Larry P.
It’s the people, not the neighborhood, that are in danger because they they threw out all common sense to get that “nice” home and signed for loans they could not afford,. The people, realtors, and mortgage people are now paying the price for the Bank and Lending institutions greed!
May 1st, 2008 at 9:58 am
OCR, can you stop it with the hysteria? Let’s all take a deep breath and focus on reality.
No “neighborhood” is in danger of foreclosure. Do you think someone comes out and puts a giant FOR SALE sign on an entire block of homes?
If I want to read tripe, I’ll pick up a National Enquirer.
May 1st, 2008 at 10:08 am
There are now 4 short sales on my block. I am sure those will become NOD soon if they are not already. On the good side, looks like my neighbor with 13 cars and 5 families (3-4 people each) is being evicted by the landlord. Gotta love Garden Grove.
May 1st, 2008 at 10:18 am
maybe the author of the article should have defined what he means by neighborhood in foreclosure danger. but i think that it refers to the fact that property values have a tendancy to drop in neighborhoods with a lot of foreclosures in them, thus making it a danger to neighboorhood property values. he is just listing number of foreclosures by zipcode and suggesting that if there are a lot of foreclosures in your zipcode your property value is in danger of going down more, and if the number of foreclosures is increasing, your property values might be at risk.
May 1st, 2008 at 10:28 am
Hey Larry P, What kind of a dumb remark was that LOL he he he. I’m a construction worker who makes 85k a year (at 4 days a week) and i”ve never missed a beat + at least 8 months worth of bills in the bank. My son is a landscaper who is about to buy a second home and use it as a rental property and my neice is a realtor who is out somewhere in spain on her honeymoon. I consider my self to be a below than average joe considering my education, ethnicity, and upbringing. Anyone can lose they’re home during tough times. and us as community members should not giggle at the misfortune of others. It’s snobby sissy’s like you that get people into these problems and it’s unselfish people like me who help them when it gets tough. next time think about who might be reading your comments and the situations they might be in before you type. (Blogger’s Note: This comment has been edited.)
May 1st, 2008 at 10:47 am
The populations in these cities were more likely to go subprime, and then once those started to default, many decided to walk rather than be underwater. The foreclosure numbers we are seeing are overwhelmingly skewed by this phenomenon.
May 1st, 2008 at 11:39 am
Kissmy Brown ***,
“Snobby SissY”??? Lol! Sensitive much? You might want to try a reading comprehension course, kissy! I wasn’t giggling at the misfortune of others but at the premise that “neighborhoods are in danger” of foreclosure. Unlike MANY on this board, I NEVER “giggle” at the misfortune of others…heck, in my field, I’m a freakin’ HERO for my clients! That is why they ALWAYS come back!
Also, I KNOW that there is an LARGE number of construction workers AND Landscapers sliding into foreclosure because the numbers SHOW they are! Congrats on you and your son remaining employed and making money…many in your field have not!
My point, since you weren’t paying attention, was that unless you lose your INCOME and continue to pay your mortgage, you are in no DANGER of foreclosure! It is NO secret that MANY in a “Real Estate” related job right now are suffering. Last I checked, construction and lanscaping were somewhat “real estate” related. Does that clear it up for you a little bit better, Mr. Sensitive?
May 1st, 2008 at 2:22 pm
Gotta love the childish and stereotypical attacks on whole classes of people. If you think the mortgage crisis was the fault of blue collar workers trying to purchase a house in Malibu, you are kidding yourself.
Get serious folks, throughout history people have run into financial trouble when they lose their jobs regardless of whether they were blue collar, white collar, or sequined collar like MC Hammer. The problem arises when those folks are living above and beyond their means, and did not put any financial safety nets in place. The simple fact is that most people are always a job loss away from serious financial trouble unless they are able to quickly find another job at a similar salary because unless you are living BELOW your means, you do not have a warchest to draw upon in a time of need.
I am fortunate enough to make a very good living, and have a very secure career. That said, if I get canned, my family would be in a tough spot if I could not find new job within a few months.
This mortgage crisis was not caused by a swell of job losses across the board. Although unemployment is up in certain sectors, the unemployment rate is fairly low based on historical numbers. The mortgage crisis was caused by people of all walks of life, at various economic levels, taking on mortgages with artificially low initial interest rates that were subject to balloon increases after a few years, banking that the value of their newly purchased home would appreciate sufficiently before the rates adjusted so they could refinance, only to find that home developers had over saturated the market with inventory, thus causing the inevitable cessation in increases and then eventual drop of home prices. The so called housing bubble bursting.
Simple supply and demand. Only so many people need a house and/or a second house, and about a year and a half ago we hit a point where the supply greatly exceeded the demand, and prices plummeted.
The NODs, short sales, and foreclosures that have caused this crisis are not those caused by job loss, which have always been accounted for in the market, but are those caused by the foolish among us, whether they be dockworkers, contractors, executives, bankers or entertainers, who bought into the great new American dream of receiving something for nothing by readily agreeing to laughable mortgage terms that had a great chance of causing trouble down the line, and not making any contingency plans.
I feel for the folks who lost their jobs as a result of this crisis, and for those who happened to lose their jobs at such an inopportune fr unrelated reasons, but have zero sympathy for those folks who really caused this problem in the first place, the greedy among us who needed the extra bedroom, the stainless steel appliances, the extra garage, the brand new pool, the gold trim, and the crystal chandelier that they could not afford. They caused this mess, an they should be made to pay.
Unfortunately, our government, as is too frequently the case, is willing to come in and play savior to not just those who had the misfortune of a job loss, but also those who potentially caused their neighbor’s job loss by their own greed. Although it may be difficult to administer, I think the only appropriate debt relief program would be one that does not wipe out the debt of the greedy, but simply extends the time for repayment, with long lasting and severe credit consequences as a result. Pure economic Darwinism with a touch of compassion for those who did not cause the crisis, and a hammer of contempt for those that did.
May 1st, 2008 at 5:12 pm
Wow…. Larry’s first comment generated a lot more controversy than it should have. People in housing related industries are at most risk of losing their jobs right now. Nothing derogatory there.
I agree that the title of this blog entry blows it a little out of proportion. Unless you live in Santa Ana, Garden Grove, or Anaheim, it doesn’t look like you have much to worry about.
May 2nd, 2008 at 2:57 am
Every one of those cities listed is a minimum 25% Mexican (not just Hispanic, but Mexican specifically) except for one.
The ugly truth is that a lot of this housing mess comes from lending to illegal aliens. The banks involved ought to be the ones absorbing the hit for their illegal activity, not the taxpayers.
May 2nd, 2008 at 9:23 am
David-
You are correct about lending to illegal immigrants. Talk about a foreclosure risk… How can you lend to someone that isn’t supposed to be hired in this country? I’m not sure how a deal like this goes down without the use of a fraudulent social security number to pull credit.
May 4th, 2008 at 10:43 pm
I know you’ve all been waiting for it, so here is Steven Thomas’ latest market report, with continued GOOD news for Orange County real estate:
Market Time Report, May 1, 2008: The First Time Wave is Growing
Compared to last year, demand is stronger, there are fewer homes on the market and the expected market time is much lower. The first time home buyer wave continues to grow and plant the seeds to an eventual recovery.
The reports from the streets of Orange County are unanimous: first time home buyers are fueling a surge in activity that continues to flourish and has been steadily growing since the middle of February. Multiple offers in the lower ranges, homes priced below $500,000, are now quite common throughout Orange County. The numbers illustrate how demand has not only surged past the 2007 level, but is quickly approaching the 2006 level. Until just four weeks ago, year over year demand had not been stronger than the prior year since September 2005, the beginning signs of the current slow cycle. Demand, a snapshot of the prior 30 days of escrow activity, has climbed by an additional 166 escrows in the past two weeks to 2,540. Last year at this time, demand was at 1,863 escrows, 677 fewer than today. Two years ago it was at 2,701, or 161 additional escrows.
The active listing inventory has remained steady in 2008. In the prior two weeks, the active inventory has dropped by 119 homes to 15,437. We started the year with 14,724 homes, 713 fewer than today, but that was after shedding 1,050 homes in December 2007 with sellers pulling their homes off the market for the holidays. Still, that only represents a 5% increase so far this year compared to a 37% increase in the inventory last year. Two years ago there were 3,481 fewer homes on the market; however, the inventory was growing at an extremely rapid rate in 2006. The inventory had already increased by 65% to this point and it continued to grow by another 34% until reaching its peak of 16,006 homes back in August 2006. Today, the active inventory has steadily remained just under 16,000 homes and appears as if it will continue along that path.
With steadily increasing demand and a stable active inventory, the expected market time has dropped like a rock. Starting this year with a market time of 15.6 months, a deep buyers market, the market time has improved to its lowest mark of the year to date at 6.08 months, a 61% drop. Last year the market time was at 8.33 months and climbing at an alarming rate that would spook any buyer considering purchasing. Two years ago the market time was at 4.43 months and climbing. By the end of June 2006, the market time had blossomed to 6.33 months.
So, it is safe to say that the Orange County housing market has definitely changed gears this year. The lower ranges and the flood of first time buyers are entirely responsible for this change. What changed? The answer is quite simple: the significant drop in prices has allowed buyers that have been sitting on the fence to finally afford to buy once again. After being priced out of the market with rampant appreciation earlier this decade, affordability is finally improving and inviting buyers that have been waiting a long time to finally purchase.
Properties priced below $500,000 account for 47% of the entire active inventory and 56% of demand. Last year, this same range accounted for only 26% of the active inventory and demand. Detached homes below $750,000 are actually experiencing a slight sellers market, below the five month mark. The volume of distressed homes in the lower ranges has provided the fuel for the decline in pricing. 77% of all distressed properties are priced below $500,000 and 94% are priced below $750,000. Short sales and foreclosures now make up 36% of the current active inventory versus 35% two weeks ago. There are now 5,576 distressed properties on the market. The overwhelming majority, 81%, are short sales, sellers with loan balances that exceed the current market value and are “subject to lender approval.” For short sales, there are currently 4,504 active listings and demand is at 544 escrows. The expected market time is at 8.28 months, dropping from 9.86 months two weeks ago.
But, this statistic is extremely misleading, just ask a buyer searching for a home. A large portion of the 4,504 active listings already have secured an offer on the property signed by both the buyer and seller, yet they remain active on the market. The reason is that there is also a signed short sale agreement that allows the seller to continue to actively market their home until formal lender approval occurs. This process takes anywhere from a couple of weeks to months. Unfortunately, there is no way of knowing which short sale listings already have an agreed upon offer submitted to the bank other than contacting the listing agent directly for their verbal answer.
So, true demand in Orange County is actually understated. The word on the street is that close to 50% of all active short sale listings already have an agreed upon offer submitted to the lender. If those were to be truly changed to “pending escrow” status, the demand count would increase considerably, the inventory would drop and the market time would drop as well. Unfortunately, not all short sales with offers submitted for lender approval are actually approved. Roughly 1 out of 3 are accepted. Many are rejected because they are priced too far under their true market value. With increased demand comes more realistic pricing of short sales. As this year progresses, expect the lender acceptance rate to grow closer to 1 out of 2.
Where’s the demand in the upper ranges? The financial crunch is still impacting liquidity in the upper ranges. Demand is off by more than 30% compared to last year for all homes priced above $750,000. Remember, the conventional loan limit and FHA loan limit were both just raised to $729,750. However, there are now three tiers of loan rates: the old conventional loan limit up to $417,000, $417,001 up to the new limit of $729,750 and then $729,751 on up. The original intent was to expand the lower interest rates of conventional loans to higher ranges in areas with much higher prices, like Orange County. Historically, major changes in federally backed loan programs were carefully put together for the better part of a year. This time, the financial industry was given about a month to create and implement a significant change.
The credit markets are just now adapting to the new loans. Part of that adaptation is the three tier system. Until the entire secondary market becomes more comfortable with these changes, the discrepancy in interest rates between each tier will be sizeable. There is about a three-quarter point differentiation between each tier. As the market adapts to the new program and liquidity is restored in the financial markets with investors once again purchasing pools of loans, the discrepancy between the tiers will shrink to about a quarter of a point. The experts are predicting that there will be considerable improvement by the end of the third quarter of this year, by the end of the summer. Currently, for loans above $729,750, the interest rates, loan qualifications and down payment requirements are extreme barriers to entry. That does not bode well for homes priced above $800,000, where the rate is approximately 1.5% above the $417,000 rate. This has impacted the upper range dramatically. All ranges above $1 million are experiencing market times above ten months; the higher the range, the higher the expected market time. Not surprisingly, the areas in Orange County that are impacted with market times above ten months are Corona Del Mar, Coto de Caza, Laguna Beach, Newport Beach and Newport Coast. These areas should all improve by the end of the summer with improvements in the financial markets.
With demand off in the upper ranges by more than 30%, do not be surprised when the media reports a significant year over year drop in the median sales price. With the lower ranges hot and the upper ranges not, the median value will be much lower. The average pending sales price a year ago was at $869,000 compared to $605,000 today. This is partially due to the decline in prices, but it also has a lot to do with a major decline in demand in the upper ranges. For the first three quarters of 2007, prior to the beginning of the financial crunch, the number of sales above $1 million in all of California was only off by 3% compared to the prior year. For homes below $1 million, sales were off by almost 30%. A month after the start of the financial crunch, September of 2007, sales above $1 million were down 26% compared to the prior year. The upper ranges have been impacted ever since. As liquidity is restored in the upper ranges, do not be surprised by an increase in demand in the upper ranges and an increase in the median sales price. ( End of report.)