Categories
Employment

Unemployment rate unexpectedly rises to 8.7% in July

California’s jobless rate inched higher in July, ending five months of falling rates, according to the state Employment Development Department.

The jobless rate increased to 8.7% in July, compared to 8.5% in June and 10.6% in July 2012. However, the state added 38,100 jobs in July, and gained 807,700 positions since the recovery started in February 2010.

Seven categories – including manufacturing, transportation, information, professional services, and education and health services – combined to add almost 50,000 jobs last month. Professional services added the most, with 15,000 positions.

Construction and government cut about 11,400 jobs in July, with construction – a bright area in recent months – eliminating 7,300 positions.

The Bay Area continues to enjoy the lowest jobless rates, with Marin at 5.3% in July. San Mateo and San Francisco followed at 5.7% and 5.9%, respectively.

Despite a better economy and job creation, more than half of the state’s 58 counties reported double-digit jobless rates in July. Agriculture-dependent Imperial County had the highest rate at 26.1%. The county has 19,800 job-seekers, more than double the number in larger Marin County.

Categories
Real Estate

Foreclosures plunge to lowest level in seven years, thanks to higher home prices

Foreclosures fell to the lowest level in more than seven years during the fourth quarter in California, the latest evidence of a better housing market and an improving economy.

Notices of default declined to 18,567 notices of default from January through March, a 51.4% percent drop from fourth-quarter 2012 – and off 67% compared to a year ago, according to DataQuick. Notices of default – the first step in the foreclosure process – peaked at 135,431 in first-quarter 2009.

The just-completed quarter’s default notices were the lowest since fourth-quarter 2005, the final months of the housing boom and just before the housing market slide. However, foreclosure activity remains higher than the historic average.

“Foreclosure starts were already trending much lower last year because of rising home prices, a stronger labor market and the settlement agreement between the government and some lenders,” says John Walsh, president of DataQuick. “But it appears last quarter’s drop was especially sharp because of a package of new state foreclosure laws – the Homeowner Bill of Rights – that took effect January 1. Default notices fell off a cliff in January, then edged up.”

Fast-rising home prices definitely helped curb foreclosures. California’s median-home price – meaning half the homes sell for more, the other half for less – increased to $297,000, a 22.7% gain from a year ago, according to DataQuick.

Default notices were higher in the state’s most affordable neighborhoods, with the average homeowner almost nine months and $14,300 behind on their payments.

Most of the loans entering default are from the 2005-2007 period, when weak underwriting was at its peak.

As expected, coastal communities – where home prices are higher and have rebounded faster – report fewer foreclosures than inland areas, such as the Inland Empire and central San Joaquin Valley, at least based on the percentage of filings

Despite the dramatic drop, Walsh adds foreclosures could increase, especially with home prices and refinancing critical to the turnaround.

“It’s certainly possible foreclosure starts will pick up at some point this year if lenders need to play a lot of catch-up,” he says. “Rising home prices will be key to the final mop-up of the foreclosure mess. As values rise, fewer people owe more than their homes are worth and more people can refinance into a more favorable loan. It also means more who fall on hard times can sell their homes for enough to pay off the loan.”