Bay Area foreclosure filings increase by 21%
Although San Francisco has been immune, foreclosure filings around the Bay Area have risen by 21% in the third quarter compared to the third quarter last year according to this San Francisco Chronicle story. The story also points out that this was the fourth consecutive double-digit increase although they are nowhere near the historic highs in the mid-1990s.
And foreclosure filings are not the same as foreclosures -- they only convey that homeowners are behind on their payments by about 90 days and are being warned. Many (75%, in the Bay Area that number is closer to 90%) will be able to scramble to get back on top of their payments.
Santa Clara and Alameda counties recorded the largest percentage increases in foreclosures -- 36.4 percent and 32.1 percent respectively. Foreclosures fell in both San Francisco and Marin counties.
...Nowhere has the bipolar economy been more apparent than in the Bay Area where existing, single family home sales are expected to top 547,000 this year, up from 504,430 in 2001, according to the California Association of Realtors. The median home price in the Bay Area hit a record high $417,000 in July and August, though it slipped slightly to $414,000 in September, according to DataQuick....
"It takes a while for financial stress to show up in the mortgage defaults, because lenders and borrowers alike will make every effort to work things out, " said Tom Lieser, senior economist at the UCLA Anderson Forecast. "It could be that we're beginning to see the impact of people who have been unemployed for a long time."
...Traditionally, housing payments -- which include principal and interest on the mortgage as well as property taxes and homeowner insurance -- could not exceed 28 percent of gross, or pretax, income. Housing payments plus other debts -- the so-called back-end ratio -- couldn't be more than 36 percent.
But in recent years, lenders have put less emphasis on those figures. For instance, in the Bay Area, home buyers with good credit ratings can qualify for loans that will require them to devote a whopping 40 to 50 percent of their gross income -- and more -- to housing and other debt payments.