While this number is actually a five percent decrease compared to the last six months, it’s eight percent higher than the first six months of 2009.

According to the report, “1.28 percent of all housing units (one in 78) received at least one foreclosure filing in the first half of the year.”

As you may have guessed, California tops the list in total number of foreclosures with over 340,000. This equates to one in every 39 of California’s housing units receiving a foreclosure notice over the past six months.

The only silver lining for California is that staggering total is actually almost 13 percent fewer than the number experienced in 2009’s first half, however, these numbers are still unsettling as they are higher than the nation’s ever seen overall.

Additionally, almost every other state’s foreclosure amounts increased substantially to suggest the national industry is far from recovery.

Florida and Arizona shared California’s rank with the next two highest total foreclosures, but Nevada took the cake in terms of percentages. 5 percent of their housing units, or one in every 17, received a foreclosure notice in the past six months. Arizona came in second with one in every thirty.

Some inferences can be made from these statistics. Tourism seems to be related to these numbers as California, Arizona, Florida and Nevada have some of the highest tourism rates in the country, and it’s widely accepted that tourism falters along with a down economy.

Perhaps the rate of second-home defaulting is increasing in the poor economy. Many buyers who purchased at the pinnacle of the inflated market are definitely attracted to their defaulting or short sale options in order to cut their losses on high mortgages at the expense of their credit score.

It appears the market is in for more hurdles in the coming year, as the predominant category of listings are foreclosures and short sales and numbers suggest they will continue to be for quite some time.

If you would like to sell your house in this market contact CalStar Realty and Mortgage.

In essence, a short sale is getting a lender to take a loss on their initial inflated terms of mortgage, allowing the homeowner freedom from the initial debt. This can be a very convoluted process, since many lenders may be involved and all will have to agree on the loss.  A buyer is necessary as well, and though short sales typically have a very attractive price tag, most of the time cash is the preferred method of payment since convoluted financing is what caused the unreasonable mortgage to begin with, and cash is much better to cover losses than credit that may not be there in the future.  It’s not uncommon for there to be at least 10 or 20 offers on a home being short sold, and oftentimes the offer with the most cash constitution—not necessarily the highest dollar amount, is the most desirable.

This can be a good thing for investors, as they typically have much greater capital than families or first-time buyers, but the process can be extremely arduous and contain rolls of red tape based on the number of parties involved that have to negotiate and agree on the deal. Many short sale offers ultimately fall through.

This is where the Obama Administration is attempting to step in. With a new standardized short sale plan that is rolling out this year, parties involved are required to use uniform documentation, pre-approved terms and accelerated turn-around times in an attempt to avoid the long drawn out negotiations that sometimes ruin short sale offers. It also offers incentives in the way of homeowner relocation grants, mortgage servicing fees, real estate agent commissions and stipends for secondary lenders and investors.

Though the jury is still out as to whether the streamlining will be effective and encourage more short sales to be initiated and taken to completion, it seems any kind of standardization process will be in favor of investors with cash capital that can benefit from purchasing these homes, as well as homeowners that need to free themselves of over-inflated mortgages.

If you are interested in learning more about the short sell process or want to invest in properties that are offered for short sale  please call me at 818-241-5196.