California notices of default soar

That was quite a whopper of a report from DataQuick earlier today about notices of default sent to California homeowners during the first quarter of 2007.

The table from the report says it all - from the fourth quarter of 2006, defaults rose from 37,994 to 46,760, the highest level for a single quarter since 1997. For this same quarter last year, defaults were only 18,856, less than half the quarterly average of just under 34,000.


Here in Southern California, outlying counties such as San Bernardino and Riverside are being affected most along with the Central Valley hotspots where subprime delinquencies have been rising quickly.

The chart below was from an LA Times article from this post in January showing the quarterly rate for notices of default from the early 1990s up through the fourth quarter of 2006.

It is the steepness of the curve that should be alarming - the most recent data point will maintain the current slope making the future direction of the curve the all important question for the next few quarters.


Calculated Risk has the following chart up with the first quarter data annualized, then laid up next to the data for the last 15 years.

The problem here is that, with the rate of change above from quarter to quarter, you don't know whether or not this understates or overstates the problem. If the rate of change stays constant, the actual data will be well off the chart below.


Through much of last year as the foreclosure data came in, the folks at DataQuick were quick to note that even though the quarter-over-quarter or year-over-year percent change was high, the overall level was still quite low by historical comparison.

That is no longer the case.