SAN DIEGO -- California home foreclosure activity plummeted to an eight-year low in the fourth quarter as price gains left fewer owners owing more money than their properties were worth, a real estate research firm said Tuesday. There were 18,120 default notices filed on houses and condominiums from October through December, down 10.8 percent from 20,314 in the previous three-month period and down 52.6 percent 38,212 from the same period of 2012. It is the lowest number of default notices since 15,337 were filed in the fourth quarter of 2005.
A sharp rise in home values has left fewer people vulnerable to foreclosure. The median sales price for a California home was $364,000 in the fourth quarter, up 22.1 percent from $298,000 a year earlier. It is the fifth straight quarter that the median has risen at least 20 percent from the previous year. "There's a strong incentive to hang on," said John Walsh, president of San Diego-based DataQuick.
In California, 13.3 percent of mortgaged homes were "underwater" at the end of September, meaning homeowners owed more than their properties were worth, according to the latest figures available from CoreLogic Inc., a real estate data firm. That was down from 15.4 percent three months earlier and 28.3 percent at the end of September 2012.
Default notices remained concentrated in lower-priced neighborhoods, DataQuick said. ZIP Codes with a median sales price below $200,000 saw 3.1 notices filed for every 1,000 homes. The rate fell to two notices for every 1,000 homes in areas with a median sales price between $200,000 and $800,000, and 0.7 notices for every 1,000 homes in areas with a median sales price above $800,000.
Default notices are the first step in the foreclosure process. There were 8,205 foreclosures completed during the fourth quarter, up 2.2 percent from a seven-year low of 8,030 in the third quarter but down 61.2 percent from 21,127 a year earlier. Foreclosures peaked at 79,511 during the third quarter of 2008.