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general and other states.”
While the foreclosure statistics may appear favorable, they are not what would be considered a healthy in any case.
From when RealtyTrac began tracking foreclosures in 2005 to now, foreclosures in Orange County peaked in July 2009. In that month, the county saw 7,286 properties receiving a notice of foreclosure.
In September 2011, 2,761 foreclosure notices had been handed out.
“We’ve come down pretty dramatically for that peak,” Blomquist said.
However, in 2005, when the market was in much better shape, the average number of properties receiving notices in Orange County was 276 per month.
“We’re still a ways from what we would consider a normal, healthy real estate market,” he said. “We’re on the right path to getting back to a normal, healthy market, but we still got a ways to go before we get there.”
One indicator of the foreclosure scenario heading the right way in Orange County is the number of short sales versus foreclosures, according to RealtyTrac.
A short sale is preemptive strike to avert foreclosure when homeowners and lenders negotiate to sell the home at a lower rate rather than having the bank take outright possession of the home.
In Orange County during the second quarter, the most recent data available, there were nearly twice as many short sales as bank-owned, or foreclosure, sales — 2,286 short sales versus 1,368 bank-owned sales, according to RealtyTrac.
Nationwide, the opposite is true. In the second quarter of the year, there were just more than 100,000 short sales recorded compared with 162,000 bank-owned sales.
“We think that’s significant, because to us, short sales are more indicative of a market that has stronger demand and is able to more efficiently dispose of these distressed properties,” Blomquist said.
An added advantage short sales have over bank-owned sales for a community is the average sales price, which for bank-owned sales tends to be lower than the average price of short sales.
The national average was $145,211 in the second quarter for bank-owned sales. For short sales the average was $192,129. In Orange County, the average bank-owned sale was $395,550, and the average short sale price was $427,008.
But Bartos argues that doesn’t necessarily mean the market in Orange County is getting healthier.
“The market is not healthier because there are more short sales,” Bartos said. “Instead it’s an indication that lenders would much rather see borrowers pursue that option than foreclosure. It’s still indicative of a distressed market as both are distressed sales.”
The reason for Bartos’ pessimism?
“There are still too many delinquent mortgages. State lawsuits and government intervention has prevented many homeowners from being foreclosed upon despite no payments being made for years in some cases,” he said. “(Bank-owned) inventory that we would have seen is not entering the market as lenders look to foreclosure as a last resort.”
While avoiding foreclosures is a good thing, Bartos said, it won’t be until the area sees “substantive declines in foreclosure filings combined with a decline in distressed property selling, which includes short sales and (bank-owned sales), then perhaps a case might be made to say that the broader market is improving.
For Blomquist, it all goes back to the consecutive drops in foreclosure numbers.
“It’s not just a one- or two-month trend,” he said. “We’ve seen 20-straight months … every single month we’ve seen a year-over-year decrease in foreclosure activity. I think we’re past the peak.”
He added, “I think we’re seeing these glimmers of hope in the market.”
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