From mobile homes to million-dollar estates, thousands of Napa County homes in every price range fell to foreclosure over the past six years.
From 2007 to last year 3,115 Napa County homes were recorded as foreclosed as the “American dream” turned into a nightmare for those homeowners. According to the federal census, the county has 27,183 owner-occupied dwellings.
Today, the foreclosure trend seems to be abating, analysts said. The number of Napa County homes lost to foreclosure dropped by 32 percent, from 552 to 375, between 2011 and 2012, county statistics show. The 2012 total is the lowest in five years. Compared to 2008 numbers, foreclosures in 2012 dropped 50 percent, statistics show.
“It’s a good sign,” said Robert Souza of Windermere Napa Valley Properties. “We are definitely recovering.”
Napa County isn’t alone. According to DataQuick information services, the number of Sonoma County homes lost to foreclosure dropped 31.2 percent in the last quarter of 2012 compared to a year earlier. The number of Solano County homes lost to foreclosure dropped 28.3 percent over the same period.
“Home values increased through most of 2012, and the rate of increase picked up toward the end of the year,” said John Walsh, president of DataQuick. “That means fewer and fewer homeowners are ‘underwater,’ where they owe more than their homes are worth. That, in turn, means they can sell and pay off the mortgage, or perhaps refinance at today's low interest rates.”
“This trend alone suggests we'll see a continued decline in foreclosure rates this year. Another factor is the foreclosure-avoidance goals of various settlements between lenders and the government," said Walsh.
Souza said that from 2010 to 2011, about 75 percent of his business was working with distressed properties. By 2012, the Realtor’s business was equally split between distressed and non-distressed properties.
“There are still hundreds of people in pre-foreclosure, but it’s not as bad as at the beginning” of the recession, he said.
Those who are behind in payments could represent the last wave of foreclosures, Souza said. “The vast number or people in trouble have either sold or are selling,” he said.
This doesn’t mean that foreclosures won’t continue, Souza said. Lenders may decide to put more bank-owned properties on the market this spring when more people are looking to move, he said.
Banks are helping the real estate market, said Mark Gelow of RPM Mortgage in Napa. The pace of foreclosures has slowed because lenders are working out more agreements and modifications with delinquent borrowers, he said.
Rising home values are another influence. “I think we’re seeing some appreciation out there,” Gelow said. Until recently, homeowners who were “upside down,” or owed more on their home than it was worth, might have considered a strategic default, where they simply walk away from a home, he said.
“Now they are more likely to hang in there because they are seeing home prices coming up. They are waiting for that to happen and they can sell — or keep the home,” Gelow said.
Karen Magliocco with Coldwell Banker Brokers of the Valley said distressed property sales made up the majority of her business between 2010 and 2011. Banks often prefer a short sale rather than a foreclosure, the Realtor said. A short sale is when a home is sold for less than what is owed on it.
“Foreclosures cost a bank so much money,” Magliocco said. “They don’t want to take it all the way to the foreclosure stage.” Additionally, “If you do a short sale it’s not as devastating on your credit as a foreclosure.”
For the homeowner who is current on their mortgage payments and not upside down, “It’s a good time to sell,” she said. “With a short sale, you never know if the bank will approve the sale. With an “REO” (real estate- or bank-owned property) sometimes you can’t get a loan on them because they are sold ‘as is.’ A non-distressed homeowner is in a good position right now.”
Home appraiser Bruce Bradley of Bradley & Associates said he’s seeing fewer foreclosed homes on the market as well.
“The market looks like it’s stabilizing,” he said. “Prices are starting to increase. It’s incremental, but it’s happening.”