Nearly five years after it began to inundate the local housing market, the flood of foreclosures in Sonoma County shows little sign of receding.
After a brief dip this spring, mortgage defaults jumped 21 percent in Sonoma County during the third quarter, according to a new report issued Tuesday by DataQuick, a real estate information service based in San Diego.
Lenders sent default notices — the first step of the lengthy foreclosure process — to 896 borrowers in during the third quarter, up from 738 during the second quarter. In the same period a year ago, lenders sent 954 default notices to borrowers who had fallen behind on their mortgages.
Real estate agents who specialize in distressed properties doubt the latest figures signal a new wave of foreclosures. Instead, they expect a steady number of families will keep losing their homes for at least the next few years.
"It sounds like it's just more of the same," said John Binns, an agent with Creative Property Services. "We still have a huge backlog to get through and we're getting through it very slowly."
Every week, on average, 38 borrowers lose their homes in foreclosure proceedings. Overall, Sonoma County borrowers lost 493 homes in foreclosure during the third quarter, virtually unchanged from the second quarter.
Most of the loans were made between 2005 and 2007, when underwriting standards were notoriously lax.
The typical borrower was eight months behind on their mortgage payments by the time the bank sent out a default notice, DataQuick reported.
It took nearly 10 more months for the home to be taken back in foreclosure. A year ago, that time was about nine months.
One such home is a three-bedroom home on Rainier Avenue in Santa Rosa's Bennett Valley. The property was lost at auction to Wells Fargo Bank in August and for the last week has been receiving a thorough cleaning and painting in preparation for its sale.
"We'll have it on the market by next week," said Doug Solwick, broker/owner of Advantage One Real Estate in Santa Rosa.
Plenty of homeowners will "continue to struggle" to keep their homes until the economy improves and the county adds a large number of new jobs, Solwick said.
Large numbers of distressed properties continue to depress home prices, making it difficult for home builders to construct new houses — typically an important engine of economic growth.
Default notices jumped in 2007 as a combination of risky loans and falling home prices put large numbers of homeowners in danger of foreclosure. Such notices reached a record 1,392 in the county during the first quarter of 2008.
That year, banks seized a record 2,820 county homes in foreclosure proceedings.
Even as foreclosures rose, home prices slid. The county's median home price peaked in summer 2005 at $619,000 before plunging to $305,000 in February 2009. Last month the median price was $350,000.
For the past two years, the number of foreclosures has dropped to about 2,000 annually, a figure the county is on pace to match again this year.
Statewide, mortgage defaults also jumped sharply during the third quarter. Lenders sent 71,275 default notices during the quarter, up 26 percent from the previous quarter but down 14 percent from a year earlier.
DataQuick President John Walsh suggested the number of default notices are unlikely to drop back to levels seen during the spring.
"Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively," Walsh said.
Even so, agents rejected the idea that the banks at last will open the floodgates and foreclose promptly on all the homeowners who have stopped making their mortgage payments.
"We've been talking about this for two years," said James Madison, an agent with Coldwell Banker in Santa Rosa. "I just don't think it's going to happen."
Nonetheless, the backlog of foreclosures continues to impact the state's housing market. About a third of all houses and condominiums resold in California in the third quarter had gone through foreclosure in the previous 12 months.
Doug Del Fava, an agent with Frank Howard Allen in Santa Rosa, expects little change for foreclosure activity in the coming months.
"The numbers are going to fluctuate a little bit but I don't think they're going to go away any time soon," he said.
Terriann McGowan, broker/owner of Admiral Real Estate in Rohnert Park, said some experts now say it could be 2015 or later before the number of foreclosures significantly declines.
"We're kind of in a holding pattern," she said.
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