California leads US housing market out of bust that it began
'Golden State' that led the US market into the abyss with reckless subprime lending is now at the forefront of national housing recovery
California, the state that led the US into the housing boom and bust with some of the most reckless subprime mortgage lending, is now leading the way out.
A plunge in new defaults in California helped push US foreclosure filings to the lowest level in almost five years, according to RealtyTrac, a seller of home-loan data. Across the country, 531,576 properties received notices of default, auction or repossession in the third quarter, down 13 per cent from a year earlier and the lowest since 2007. One in every 248 households got a filing, RealtyTrac said.
California, the birthplace of subprime mortgage lending, saw an explosion of foreclosures thanks to such industry innovations as "no-doc" loans that required no proof of income. The state's recovery is mirrored by US home values, which rose 1.2 per cent in July from a year earlier, according to the S&P/Case Shiller Index of property prices in 20 major cities. It was the second straight 12-month advance and the biggest jump for the real- estate gauge since August 2010.
The gains were moving in tandem with foreclosure declines as lenders controlled the flow of bank-owned homes that came to market, crimping inventory and pushing up prices, said Daren Blomquist of RealtyTrac.
Initial filings last month fell in 31 states, led by California, the most-populous US state, which dropped to a 69-month low. Defaults dropped 45 per cent from a year earlier, 34 per cent in Arizona, 22 per cent in Michigan and 21 per cent in Georgia, RealtyTrac said.