People frequently ask me about foreclosures in Silicon Valley; If you pay attention to the media instead of understand the facts, you are likely to get the “wrong view”. The biggest increase in defaults in California is in the Central Valley and the Inland Empire (San Bernardino and Riverside counties) and Palmdale in Southern California.

Actually, half of the state’s default activity is occurring in 293 ZIP codes…almost all of these being in the Central Valley and/or the Inland Empire.

First-time Buyers appear to be the hardest hit, resulting from the relaxed criteria from many of the lenders in these past several years.  As you know, many borrowers took adjustable rate loans at low rates, hoping to refinance into a better loan in a few years.  But, of course, refinancing is no longer a slam-dunk and, as the rates continue to rise, many owners can’t afford to keep paying           

Regarding the “long view” history of real estate in California: Since 1970, our real estate market has only dropped seven times…6 times under 3.7% and only once at 4.5%.  In 1970, the median cost of a single-family home in California was $26,000.  Today (37 years later), the median price is $588,970…or appreciation of 2,165%!!