Categorized | Residential

Defaults on Mortgages Rise Significantly in California

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California’s residential real estate market took another step backwards with the release of the most recent housing report. The number of mortgage defaults in the state jumped more than twenty five percent in the third quarter. The increase comes as a result of banks finally reviewing their backlogs of delinquent loans. There had been a nationwide delay, which had led many of the delinquencies to go unnoticed until now.

Defaults on mortgages are generally the first step taken towards foreclosures. California’s default numbers jumped from roughly fifty-five thousand to seventy-one thousand in the past quarter.

The increase in defaults certainly is not a good thing for the fragile housing market in California. Real estate analysts in the state believe that the number of defaults may continue to increase, as lenders continue to grow more aggressive in the identification of delinquent loans.

The largest percentage of defaults took place in homes valued at less than two hundred thousand dollars. The default rate for that category was eleven in every one thousand homes. Those homes that are valued at eight hundred thousand or more only experienced a default rate of roughly three in every one thousand homes.

An increase in foreclosures would likely send residential real estate housing prices into a tailspin. Prices are already significantly depressed, and an increased number of foreclosures on the market will likely drive prices down further. It has yet to be seen as to whether or not all of the reported defaults will wind up in foreclosure. Real estate experts in the state of California are not exactly hopeful regarding the future of the California housing market, though nothing has come to surface as to what the impact of this massive increase in defaults will be.

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About Josh Johnson

Josh is the main writer for the Residential category. He also helps out on other categories when needed, mainly the International section.

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