Notices of Default & Foreclosures Soared During 4Q 2007

Notices of default in California increased significantly during fourth quarter 2007, according to a report released by DataQuick. A notice of default is the start of the foreclosure process and is typically handed out after three months or so of mortgage payments have been missed. There were 81,550 notices of default handed to homeowners in the state last quarter compared with just 37,994 during fourth quarter 2006 (+114.6%). The level reached last quarter was the highest number recorded since DataQuick started collecting the statistics in 1992.

In Southern California, Los Angeles County had the largest share, with 13,613 notices of default recorded during the last quarter of 2007. This was up by +82.8% from the same period a year ago. Orange County recorded 4,276 notices of default, up by +115.6% over the year. The Riverside-San Bernardino area recorded 17,201 notices of default, up by +113.3% from the same period in 2006. San Diego County recorded 6,151 notices of default, up by +95.3% from the same period a year ago. Ventura County also posted an increase during the last quarter, with 1,504 notices of default, up by +89.4% from fourth quarter 2006.

Actual foreclosures in California swelled considerably to 31,676 during the fourth quarter of 2007, compared with 6,078 foreclosures during fourth quarter 2006 (+421.2%). This is the highest number recorded since DataQuick started tracking foreclosures in 1988. More mortgages are scheduled to reset this coming spring, and there is a high probability that more defaults and foreclosures will be recorded in 2008. So the big question is: when will notices of default and foreclosures peak in this current real estate cycle? Remember that foreclosures are a lagging indicator. The last peak was during the third quarter of 1996, at 15,418 foreclosures recorded. Foreclosures topped out almost three years after the state’s recession was over in 1993 (when total residential construction permits bottomed at 84,656 units).(Candice Flor Hynek)

PR: http://www.dqnews.com/RRFor0108.shtm

 

Housing Permits Took a Dive in 2007

The Construction Industry Research Board (CIRB) recently released their December construction report, which also contained preliminary housing permit numbers for 2007. The CIRB noted that revised statewide building construction codes went into effect on January 1, 2008. The December permit numbers jumped in several areas around the state as builders rushed to get permits issued prior to this change. The December surge will likely depress the January and February 2008 permit counts.

The number of single-family permits issued in the state dropped by 37.1% in 2007, while the multi-family count declined by 21.2%. The total number of permits issued fell by 31.6% to 112,300 units. The last time the state saw a lower level of activity was back in 1997 when 111,716 permits were issued.

In Los Angeles County for the year 2007, single-family permits declined by 26.6%, while multi-family permits dropped by 21.1%. A total of 20,228 housing permits were issued in the County, which was a decline of 23.2% from 2006. In Orange County, single-family permits plummeted by 42.0%, but multi-family permits rose by 5.6%. The total number of permits issued in the County in 2007 fell by 15.6% to 7,062 units.

In the Riverside-San Bernardino area, the number of single-family permits issued in 2007 plunged by 51.8%, while multi-family permits declined by 22.3%. The total number of housing permits issued in the area in 2007 was down by 47.4% to 20,545 units. The area still led the state in new homebuilding, but Los Angeles County was right on its heels.

In San Diego County, the number of single-family permits issued in 2007 fell by 26.2%, while the multi-family sector dropped by 34.8%. The total number of housing permits issued during the year was down by 31.0% to 7,436 units. In Ventura County, single family permits dropped by 55.6%, but multi-family permits rose by 29.2% (on a small base). The total number of permits issued in 2007 declined by 24.6% to 1,856 units.

In the 9-county Bay Area, the number of single-family permits issued in 2007 dropped by a comparatively moderate 18.0%, while multi-family permits fell by 34.0%. The total number pf permits issued in the area during the year was down by 27.1% to 24,308 units.

Forecasts for homebuilding activity in California during 2008 all point to a further decline. (Jack Kyser)

 

Nonresidential Construction Activity Mixed in 2007

The permit valuation numbers for nonresidential construction in 2007 were mixed. In Los Angeles County, office building valuations rose by 197.5% to $716.0 million, while hotel permits increased by 187.9% to $342.8 million. However, industrial permit values in 2007 dropped by 40.1% to $108.8 million, and retail permits eased down by 2.1% to $471.6 million. In Orange County, the only increase came in retail, up by 66.1% to $296.3 million. In the meantime, industrial dropped by 42.9% to $51.9 million, office was off by 51.2% to $282.1 million, while hotels dropped by 30.2% to $82.8 million in permit values.

In Riverside County, the only increase in nonresidential permit values in 2007 came in the office sector, up by 42.7% to $28.9 million. Industrial permits fell by 24.4% to $18.9 million, retail was down by 39.1% to $20.3 million, while hotels dropped by 17.9% to $242.0 million. The 2007 news from San Bernardino County was better with gains in office permits (+2.1% to $117.9 million), retail (+18.2% to $348.0 million), and hotels (+175.7% to $59.7 million). However, industrial declined by 6.0% to $350.5 million.

In San Diego County, the only increase in 2007 came in the office sector, up by 64.3% to $317.3 million in permit values. Industrial permits declined by 22.9% to $118.4 million, retail was down by 28.5% to $108.4 million, while hotels declined by 78.3% to $43.0 million. Ventura County saw gains in industrial permits (+32.9% to $28.5 million) and office (+4.3% to $54.6 million). However, retail declined by 11.0% to $48.2 million and no hotel permits were issued in 2007.

In the 9-county Bay Area, the value of office permits rose by 33.1% to $1,048.1 million, while retail was up by 1.8% to $513.0 million. However, industrial was off by 32.2% to $246.7 million, while the hotel sector dipped by 38.9% to $93.2 million. (Jack Kyser)

 

Los Angeles-Orange Counties Number Three in Exports

Exports from the Los Angeles-Long Beach-Santa Ana Metropolitan Statistical Area (MSA) increased by 11.2% to $48.7 billion from 2005 to 2006. Even so, the Los Angeles County-Orange County area dropped to number three in 2006 behind the New York-Northern New Jersey-Long Island MSA ($66.2 billion) and the Houston-Sugar Land-Baytown MSA ($53.3 billion) in terms of exports.

Other top California exporting areas in 2006 were the San Jose-Sunnyvale-Santa Clara MSA (#7 with $28.2 billion), San Francisco-Oakland-Fremont MSA (#11 with $18.4 billion), San Diego-Carlsbad-San Marcos MSA (#15 with $13.6 billion), Riverside-San Bernardino-Ontario MSA (#46 with $4.2 billion), Sacramento-Arden-Arcade-Roseville MSA (#53 with $3.4 billion), and Oxnard-Thousand Oaks-Ventura MSA (#66 with $2.4 billion)

The top destination for exports from the Los Angeles-Long Beach-Santa Ana MSA in 2006 was Mexico ($7.8 billion), followed by Canada ($6.9 billion), Japan ($5.8 billion), China ($5.1 billion), and South Korea ($2.6 billion). Computer and electronic products were the top export category from the Los Angeles County-Orange County area ($11.7 billion) in 2006, followed by transportation equipment ($10.0 billion), miscellaneous manufactured item ($3.2 billion), chemicals ($3.1 billion), and non-electrical machinery ($2.9 billion).

The metropolitan export data released last week by the U.S. Department of Commerce are based on information included on shippers' export declarations. The data are calculated by allocating export trade values to metropolitan statistical areas as indicated by the declared U.S. Principal Party of Interest (USPPI). The USPPI is the person or legal entity in the United States that receives the primary benefit, monetary or otherwise, from the export transaction. Generally, that person or entity is the U.S. seller, manufacturer, or order recipient, or the foreign entity operating in the United States and purchasing or obtaining goods for export here.

The USSPI-based metro export data differ from the Origin of Movement (OM) state export data. OM data measure trade values at the point where international shipments begin, often at consolidation points near border crossings or other ports of exit. USSPI metro export data do have some limitations, including export shipments for which no USSPI is declared ($42.6 billion or 4.1% of all exports in 2006). (Eduardo J. Martinez)

PR: http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_005079

 

Bay Area Hotel Business Still Good in November

According to PKF Consulting, the November occupancy rate in San Francisco was 76.5% compared with 71.8% the previous year. The average daily room rate (ADR) jumped by 17.5% to $195.20. In San Jose/Peninsula, the occupancy rate was 65.9% compared with 65.2% the previous November. The ADR rose by 8.2% to $138.56. (Jack Kyser)