Signs are mounting that the fading housing market in the US is triggering distress among a growing number of borrowers, clouding the prospects for US consumers who have carried along the stubbornly strong economy for more than four years.
In California - its real estate now representing a staggering 25 per cent of the value of all US housing - lenders warned 20,752 homeowners in the second quarter that they were on the path to foreclosure because of missed payments. That represents a rise of 67 per cent from the year-earlier period and the highest jump since DataQuick Information Systems in La Jolla began tracking the default notices back in 1992. In the San Francisco Bay Area, one of the hotbeds of the recent real estate boom, foreclosure warnings shot up a hefty 37.1 per cent.
'We're seeing more people calling and coming in and wanting to know what to do,' said Pam Canada, executive director of the Neighbourworks Homeownership Centre in Sacramento.
The organisation advises people on how to buy homes and stay in them.
DataQuick analyst Andrew LePage sees the number as a sign that more people across the state and the country are on track to lose their homes because of rising interest rates, a record-low affordability and increasing signs of a slowing economy.
While the latest statistics appear to be staggering, the numbers rise from a comparably low level. At 20,752 the number of California default notices is still significantly lower than the historical quarterly average of 32,762.
'This is an important trend to watch, but it doesn't strike us as ominous,' said DataQuick president Marshall Prentice.
