May Foreclosure Activity

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Kelly Bennett just reported on the increase in foreclosure filings last month. Let's have a look at how recent foreclosure activity stacks up against that of the early-1990s housing downturn.

In the graph to the right, the blue line displays the monthly number of Notices of Default, which occur when delinquent borrowers officially enter the foreclosure process. The red line denotes Notices of Trustee Sale, which take place when banks actually take over errant borrowers' homes. San Diego has grown since the 1990s, so in order to perform a fair comparison, both numbers have been adjusted for growth in San Diego's labor force.

(Nerd note: labor force was used instead of population or housing supply because the latter are not available, to my knowledge, in a monthly data series to conveniently align with the monthly NOD and NOT numbers. May's labor force was estimated by applying April's year-over-year rate of change to last May's figure, but that doesn't matter too much because labor force is a much slow-moving series that the bulk of any monthly change is caused by the number of NODs or NOTs.)

OK, non-nerds can safely start reading again. What the graph tells demonstrates is very clear: the rate of foreclosure activity is as bad as or worse than it was during almost all of the prior housing bust.

Despite this fact, various analysts continue to assert that San Diego's foreclosure rate is low. To which I ask: low compared to what?

-- RICH TOSCANO