Negative Media Spin
The local media is back in the habit of negative spin with the SJ Mercury News publishing a headline entitled "Silicon Valley foreclosure data: signs of stress, but some improvement". The first line states that hundreds of homeowners fell behind but foreclosures increased. Nice start to a story guys. Knowing that most people just read the first couple of lines in a story, it's no wonder people think we're in trouble.
However, in reading the article we find that default notices were down a whopping 36.7% in August as compared to August 2009. That's a huge reduction! In addition, actual foreclosures were DOWN 7.5% in Santa Clara County. In addition, cancellations of foreclosures were up almost 100% from the year before and they outpace overall foreclosures. Only San Mateo County saw an increase in actual foreclosures, up 8.7% in August.
The market is moving away from foreclosures for a couple reasons, properties are selling in the open market as regular or short sales (not all foreclosures are negative equity) and banks are working with more homeowners to avoid foreclosure. Both of those statements are supported by sales statistics and banks. There is less build-up of "shadow inventory" which means as more buyers enter the market, there is less inventory available. This also supports the rationale behind increased median and average selling prices.
Los Altos is not a hotbed of foreclosure activity and the few homes that get a Notice of Default end up selling well in the open market. Our market and the general area are selling well with prices trending up. As long as inventory stays low, we should post solid numbers for the year.