The number of California homes that went into foreclosure fell to a four-year low last quarter, providing a glimmer of hope that the state's housing crisis and recession could be turning the corner.
Numbers released Tuesday by the San Diego-based real estate consulting firm DataQuick showed year-over-year declines in the number of mortgage defaults in all nine Bay Area counties.
Foreclosures decreased by 7.9 percent in the Bay Area, dropping in every local county except Marin and Sonoma.
John Walsh, DataQuick's president, attributed the drop to a stronger housing market.
"Homeowner distress spreads fastest when home price declines are steepest," Wash said, "and it now appears likely that, barring some new economic shock, the worst of the price declines are behind us."
Other market observers reacted with caution.
"I'd wait around a little while before I said something positive," said David Blitzer, chairman of the Case-Shiller Index, whose most recent report shows the Bay Area experienced a 6.9 percent drop in housing prices over the past year.
Local home prices are still 40 percent lower than at their peak, Blitzer said, partially because banks have foreclosed on tens of thousands of Bay Area properties since the housing crisis began, flooding the market.
"What we have is a lot of hidden supply," he said.
Preeti Vissa, community reinvestment director at the Greenlining Institute, a Berkeley-based nonprofit, said she believed political factors could be behind the drop in foreclosures. Many large financial institutions have declared moratoriums on foreclosures after being accused of forging signatures and producing false affidavits — a practice called robo-signing.
The attorneys general of all 50 states have joined together in a lawsuit against the nation's largest banks over the issue.
But Vissa said she doubts the drop will be sustained.
"Unemployment is still at an all-time high," Vissa said. "Although I’m pleased to see the change, I wouldn’t cross my fingers."