Local foreclosure rates continue to rise

Local home foreclosure rates have continued to rise, led by a baffling eight-fold jump in La Crescenta filings during the month of September, compared with a year ago, according to experts and a report prepared for the Glendale News-Press by real estate tracking firm RealtyTrac.

A total of 133 La Crescenta homes last month entered into foreclosure, up from 55 in August and dwarfing the 16 from a year ago, according to the report.

One in 46 La Crescenta homes were foreclosed upon between July and September, more then triple the national average of one in 136 homes, according to the report.

The average foreclosure rate in California was one in every 53 housing units, the Irvine-based firm said.

La Crescenta’s third-quarter foreclosure rate was well above the rest of the region.

One in 109 homes entered foreclosure proceedings in Glendale during third quarter of 2009, while the rate was one in 107 for La Cañada-Flintridge and one in 90 for Burbank, the RealtyTrac report stated.

While other communities saw a continued increase in foreclosures in the last year, the increase was most pronounced in La Crescenta, where one in 160 homes received filings during the third quarter of 2008, the firm said. That average jumped to one in 80 between April and June of this year, according to RealtyTrac.

With La Crescenta’s unemployment rate of 5.9% well below Glendale’s 11.1% and Burbank’s 10.4%, the figures were surprising, said Paul Habibi, professor of real estate at the UCLA Anderson School of Management.

“I would expect that in a Palmdale-Lancaster kind of community,” Habibi said. “That’s puzzling.”

La Crescenta’s 238 filings between July and September were more than triple the 68 from 2008 and were up 78% from the prior period, according to the report.

In Burbank, foreclosures and default notices rose 22% in the third quarter, to 503, and were up 58% from a year ago, according to the report.

Glendale filings rose 2% during the third quarter, to 631, and were 61% higher than in 2008, analysts said.

Total filings in La Cañada-Flintridge more than doubled compared to the same period last year, from 29 in the third quarter of 2008 to 68 this year, and were up 39% from the second quarter, according to RealtyTrac.

The surge in La Crescenta foreclosure filings could have been driven by an economic rippling effect, said Daren Blomquist, a spokesman for RealtyTrac. “We’re seeing in areas last year that may have been isolated from foreclosures . . . now those areas are being affected and so there’s kind of a more widespread affect of foreclosures.”

The rise in La Crescenta foreclosure rates was likely a result of residents struggling to pay increasingly unmanageable mortgage payments during the recession, said Marcella Theisman, an agent for Sundance Realty in La Crescenta.

“When they bought, they bought at the top of the market and when the property values fall, either one can’t afford it, or they can’t see the sense in trying to pay more than the property is now worth,” she said.

The growing amount of area foreclosures matched national trends spurred by job losses during the recession, but the numbers remain high for an area with few new construction projects, real estate agents said.

But even as the National Assn. of Realtors reported a spike Friday in the number of nationwide home resales during September, up 9.2% from a year ago, foreclosures may not be adding much to that market, experts and real estate agents said.

Banks have been hesitant to take back some homes that have gone into default, said Robert Bridges, associate professor of real estate finance at USC’s Marshall School of Business.

“The banks are opting not to liquidate because they take a balance sheet hit when they have to do a write-down,” Bridges said.

That strategy from banks has kept a lot of homes off the market and out of the hands of potential buyers, he said.

“They might have a borrower in a house who’s only paying a portion of the monthly payment, or maybe not paying any of the payment, just to avoid the hit they would take when they have to foreclose,” he said.

That is the case across the region, agents said.

Buyers are eagerly seeking out low-priced properties that may have been in foreclosure, but they are frequently disappointed by the low number of homes on the market, said Dan Soderstrom, a real estate agent for Dilbeck Realtors in Burbank.

Much of that problem is because banks have not followed through on foreclosures and listed properties for sale, Soderstrom said.

The short supply of homes and the growing demand that has been fueled by a federal $8,000 tax credit for first-time home buyers has compounded the problem, he said.

“I’ve got nothing to show buyers,” he said.