Los Angeles Foreclosed Properties Drove $61B Value Loss
Los Angeles foreclosed properties contributed to the $60.8 billion in home values lost by property owners in the metro area during the 11-month period ended November this year, according to a real estate company.
The property loss in Los Angeles was higher than losses in any other metro area in the country during the period, but it was much lower than the $345.8 billion in residential property value lost during the entire year of 2008. The housing stock of the entire Los Angeles area in November was valued at $1.7 trillion.
Other metro areas lost substantial home values through November, but the losses were lower. Chicago lost a total of $49.6 billion and the Miami-Fort Lauderdale area lost a total of $45.9 billion.
The metro areas that gained in home values were Boston, where the residential sector grew by $23.3 billion in value and Providence, where the housing sector grew by $12.4 billion.
Despite the staggering loss in home value, Los Angeles will recover more quickly than other Sun Belt areas like Phoenix and Las Vegas because of signs of stabilization in house prices in Los Angeles, according to economist Stan Humphries.
However, the improvement in price levels could be hindered by the rise in default rates in the metro area in October, which could again increase the number of Los Angeles foreclosed properties in the coming months.
According to mortgage market monitoring firm First American CoreLogic, the foreclosure rate for homeowners with mortgage loans in Los Angeles increased from 1.75 percent in October last year to 3.69 percent in October this year. The rate was lower but close to the national foreclosure rate of 3 percent.
In October, mortgage loans that were in default by three months or more accounted for almost 11 percent of all home loans in the metro area, an increase of almost 6 percent in October last year.
In the most recent foreclosure report by a California-based research firm, foreclosure activity in California in November slowed down by more than 13 percent compared to the previous month, but it was still at a higher level than foreclosures in November last year.
California also improved its ranking in foreclosure rate by going down from second to third, but three of its metro areas – Merced, Stockton and Modesto – topped metro area foreclosure activities.
