Foreclosures Still Piling Up

Let's check in on San Diego foreclosure activity. This indicator is only marginally useful because, as discussed many times previously, much of San Diego's foreclosed inventory has been kept off the market. When new homes go into foreclosure, they may increase the backlog of "shadow inventory" but they don't necessarily have any immediate effect on supply. Still, it's worth looking at how fast that backlog is building.

The red line on the accompanying graph denotes the number of monthly Default Notices, which occur when borrowers officially enter foreclosure. The orange line signifies Trustee Deeds, which take place later in the process as homes are repossessed by their lenders.

Both rates have been trending down since last year, but both are quite high in absolute terms. Even adjusted for population growth, the pace of both Default Notices and Trustee Deeds are higher than anything that was seen even at the worst of the early-1990s housing bust.

So while new foreclosures are gathering more slowly than they were in the darkest days of the recession, they are still piling up at a pace that -- from a historical perspective -- can be charitably described as "brisk."

-- RICH TOSCANO