After experiencing a drop in September, foreclosure rates in the Los Angeles area continued to fall in October. Just as with the previous month, foreclosure rates within the market were also below the national average, indicating that the Los Angeles economy continues to grow and strengthen.
Area Foreclosure Rates
According to recent data, the foreclosure rate in the Los Angeles-Long Beach-Glendale area was 0.50 percent in October. This rate represents a drop of 0.12 percentage points when compared to the 0.62 percent that was recorded at the same time last year. The rate was also significantly lower than the national foreclosure rate, which was at 1.2 percent during the month of October.
Mortgage Delinquency Rates
Just as the foreclosure rate fell in the Los Angeles-Long Beach-Glendale area, so did the mortgage delinquency rate. During the month of October, the number of mortgage loans that were 90 days or more delinquent fell by 1.88 percent. This is a significant improvement when compared to the 2.38 percent that was posted during the same month in 2014.
A Drop in Distressed Sales
Recent data also indicates that there has been a drop in distressed sales throughout the country. Distressed sales, which include real estate-owned properties and short sales, fell by 2 percentage points when comparing October 2015 to October 2014. With a rate of 10.2 percent, the rates were up by 0.2 percent when compared to the previous month. This slight increase was anticipated due to seasonality.
Within the category of distressed sales, REO sales accounted for 6.9 percent of sales while short sales comprised 3.3 percent of total homes sales in the month of October. The REO sales share represents a decrease of 1.6 percentage points when compared to October 2014. Furthermore, the figures are the lowest they have been during the month of October since 2007. Short sales, on the other hand, fell below 4 percent in mid-2014 and have stayed within the three to four percent range ever since. The rates peaked in January 2009, at which time distressed sales totaled 32.4 percent and REO sales represented 27.9 percent of all sales.
While distressed sales play an important part in clearing the market of foreclosed properties, a high level of distressed sales can pull down prices within the market. If the current trend in distressed sales continues, it is likely to reach that two percent mark considered to be normal by the middle of 2019. At the national level, all but nine states recorded lower distressed sales shares in October when compared to the same time last year.
A Downward Trend
The drop in foreclosure rates in the Los Angeles-Long Beach-Glendale area during the month of October reflects an ongoing trend that the area has experienced throughout the year. Not only were foreclosure rates down by 0.52 percent when comparing October to September, but they were down 0.53 percent in August and 0.54 percent in July.
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(all data current as of 7/23/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.