The start of 2008 looked promising on the foreclosure front, but the April and May numbers indicate that foreclosures in the Los Angeles area are far from over.

Before you freak out too much over this foreclosure spike, remember this: All real estate is LOCAL. Repeat after me: "All real estate is LOCAL!"

The Top 15 zip codes from Los Angeles County look pretty much the same month after month... if you live in Palmdale, Lancaster or Quartz Hill, the real estate market isn't looking very pretty right now. Of the 1,460 total foreclosures in the Top 15 zip codes, 820 are in these areas, or over 56% of the Top 15. The remaining eight zip codes in the Top 15 all have 100 or less new foreclosures (as in foreclosure auctions, not NODs) for May. The chart below, courtesy of PropertyShark, shows all Los Angeles County foreclosure auctions from May 2006 through May 2008.

So how is Santa Clarita real estate faring through all this? Here's a quick run-down of the foreclosure numbers for May 2008:

Zip	Area	# of Trustee Sales	Average $ Owed
91351	Canyon Country	55	$348,301
91387	Canyon Country	36	$349,311
91350	Saugus	33	$421,897
91355	Valencia	21	$447,388
91321	Newhall	21	$392,427

No real suprises here for those who have been following the Santa Clarita foreclosure trends. The lower priced homes make up the largest number of foreclosures throughout the Santa Clarita area, so Canyon Country has been hit pretty hard compared to the rest of Santa Clarita. Remember that the amount owed on these is not necessarily the entire picture though - these numbers are just the mortgages being foreclosed upon, not the 2nds (and 3rds and 4ths) that were written off during the foreclosure process. 

What happens with homes that are bought through these foreclosure auctions? If they're upside-down (the mortgage is higher than the home is worth), then it's likely that the bank took back the home. For those that are now bank-owned, or REO, expect to see them on the MLS sometime soon, if they aren't there already, at competitive prices.

Don't confuse these bank-owned homes with short sales... with bank-owned properties, the bank now has full ownership and needs to sell.

With short sales, the current owners are playing "Let's Make a Deal" with the bank, so they are not guaranteed sales, nor are they guaranteed to sell at the prices you see on the MLS. In fact, many of the short sales are listed on the MLS at "come-on" prices meant to encourage buyers consider writing offers, and are nowhere near what the banks are willing to accept. Once an offer is in hand, then the lengthy process of negotiating with the bank will begin, often lasting up to 6 months only to fall out because the buyer and the bank are a mere $6,000 apart. Remember that the bank is not obligated to agree to a short sale - they can take the home back at the foreclosure auction and re-market it themselves at a price of their choice.

Interested in exploring foreclosures and short sales? Call Santa Clarita Realtor Linda Slocum at 661.670.0349 or send her an email.