Foreclosures in SF? Not really...

Guess the Chron needs to sell some papers this week... Dataquick put out it's regular report on foreclosures and notices of default, and the Chron picked through it and wrote a story hoping to cause people to rush out and read all about it.

In the Bay Area, 2,910 homeowners received default notices from their lenders for the April-to-June quarter, up 37.1 percent from 2,123 notices in the same quarter a year ago, according to DataQuick, a La Jolla (San Diego County) real estate research company. That increase is the highest since the first quarter of 2001, when there was a 46.5 percent rise.

The swell was bigger statewide as 20,752 default notices were sent out -- up 67.2 percent from the same quarter in 2005 and the highest increase for any quarter since DataQuick began tracking foreclosures 14 years ago. [more...]

The first problem with this article? No mention of San Francisco... The second problem with this article? No mention of how many of these notices of default typically turn into actual foreclosures... The answer? About SEVEN PERCENT.

So, let's look at the actual Dataquick article, shall we? Here's the downside to the article,

Lenders sent 20,752 default notices to homeowners statewide during the April-through-June period. That was up 10.5 percent from 18,778 the previous quarter and up 67.2 percent from 12,408 in the second quarter of last year, DataQuick Information Systems reported. Last quarter's year-over-year increase was the highest for any quarter since DataQuick began tracking defaults in 1992.

Notices of default are formal documents filed with the county recorder's office and mark the first step in the foreclosure process.

And the upside to the article,

today's statewide foreclosure activity amounts to about one-third of the peak level in the first quarter of 1996, when 59,897 defaults were filed. The state was in a housing slump back then and foreclosure activity tugged home values down by about 10 percent in some areas.

Today, only about seven percent of homeowners who find themselves in default lose their homes to foreclosure. Most stop the process by bringing their mortgage payments current, or by selling their home and paying the home loan(s) off.

Guess Mr. Tong was in too much of a hurry to get the story out, and he couldn't be bothered to read the end of the press release or the county-by-county breakdown...

And for San Francisco, how does it break down?

Q2 - 2005 - 89 notices of default (potentially SIX foreclosures)
Q2 - 2006 - 127 notices of default (potentially NINE foreclosures)

Yes, this is a 42% increase, but as I said back in February, and with only nine houses hypothetically going into foreclosure in Q2 (that's three per month), nobody is really considering this to be a market-changing phenomenon.

But things that don't change the market also don't sell newspapers.

Glad I could keep the record straight for you guys, since it seemed to have been a little too much for our friends at the Chron to read all the way down DQ's press release today.

Default notices increase [SFGate]
California Foreclosure Activity Hits Three-Year High [Dataquick]
California Foreclosure Activity Up, But Still Near Historic Lows [SFHomeBlog]