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In the prior foreclosure writeup, I opined that the high rate of December foreclosures was deceiving because it likely represented a period of catch-up from November’s abnormally low levels.

I guess I was wrong, because January foreclosure activity came in even higher. During the month, 3,299 default notices and 1,461 trustee sale notices were delivered to delinquent borrowers.

The accompanying graph displays the historical monthly prevalence of both default and trustee notices going back to the beginning of the region’s prior housing downturn. In order to account for the fact that San Diego has grown a lot over the last couple decades, the NODs and NOTs are represented as a percentage of San Diego’s labor force (which I use because it’s the only population indicator that is updated monthly).

Current foreclosure activity isn’t just outpacing what we saw during the 1990s housing downturn; it is leaving that period in the dust. January’s NOD rate was 2.3 times higher and the NOT rate 2.2 times higher than the worst January of the 1990s downturn.

Perhaps January is another aberration and foreclosures will back off a bit in February. Either way, there’s little doubt that they will remain quite high on a historical basis. And as long as the overhang of future must-sell inventory continues to grow at such a rapid clip, there’s little reason to expect home prices to stop falling.

— RICH TOSCANO

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