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Foreclosure Mess




The Market Can't Stabilize
Until These Homes Are Cleared Out

The real estate market news continues to be bad. Except for the news that's good.

RealtyTrac, the Irvine-based company that markets foreclosure data nationwide, said this week that the Stockton metropolitan area - basically San Joaquin County - continues as the nation's No. 1 busiest foreclosure market.

In the first three months of the year, 7,560 foreclosure filings occurred. RealtyTrac counts every piece of paper that goes through the system, default notices (the first thing homeowners receive when they fall behind on their mortgage payments), auction sale notices (the legal ads that have appeared by the thousands in this newspaper) and bank repossessions (when the lenders finally take the property).

The 7,560 number was nearly a threefold increase from the first quarter of 2007.

RealtyTrac's county numbers are paralleled by a report from La Jolla-based DataQuick Information Systems that put the actual number of home repossessions in the first quarter at 2,500. That's a fivefold increase from the first quarter of 2007.

Clearly this foreclosure mess has yet to run its course. That should surprise no one who paid attention in the first half of this decade and saw, for example, the median home price in Stockton jump from about $100,000 in 2000 to about $400,000 in late 2005. At the same time, more and more of the sales pressure from speculators and Bay Area transplants that fueled the run-up in prices was being financed by interest-only and adjustable-rate mortgages. In other words, too many people were speculating in homes here or buying homes they could not afford.

The good news is that home sales, which have increased each month this year, continue to climb. Granted, most of the sales are of foreclosure properties, but until those homes are sold, there is no real hope of the market stabilizing.

It will take time. How much is unclear since we cannot yet tell how many more homes will fall into foreclosure.

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