Foreclosures Drop in O.C. for Third Straight Quarter : Real estate: The number of defaults declines 2.3% in first three months of 1995. Experts say it’s a good sign for local economy.

COSTA MESA — In a signal that the local real estate market may be strengthening, the number of residential and commercial foreclosures declined 2.3% in Orange County during the first three months of the year, figures show.

The decrease marks the third straight quarter where foreclosures have fallen here, a reflection of the real estate and economic upturn the county had during 1994.

That contrasts sharply with Los Angeles County, where the number of foreclosures actually rose 10% during the first quarter, according to TRW REDI Property Data. The quarter before that, foreclosures in Los Angeles dropped 6.3%, the Riverside-based property data service found.

“You can’t read too much into one quarter’s figures, but in Orange County you have a clear positive trend--foreclosures are dropping,” Nima Nattagh, an analyst with TRW, said. “However, in Los Angeles County, the economic recovery is still lagging and therefore the number of foreclosures is still going up.”

During the first three months, lenders foreclosed on 1,456 properties in Orange County with a mortgage value of $308.2 million, TRW REDI said. About 90% of the foreclosures were residential properties.

The hike in foreclosures in Los Angeles County to 7,439 properties from 6,764 was probably due to higher unemployment levels and more drastically declining home prices in that county, said Esmael Adibi, director of the center for economic research with Chapman University.

“We think unemployment rates will continue to fall in both counties, which will mean foreclosures will drop in both counties,” he said. “Hopefully for 1996 there is going to be a significant decline in foreclosure activity--a positive sign.”

Although foreclosures dropped in Orange County, the number of home sales also fell 26.2% during the first three months of this year, with bad weather, the Orange County bankruptcy filing and rising mortgage rates blamed for the decline.

Nattagh said because foreclosure numbers are a lagging indicator, they are a sign of market conditions about nine months ago. But that still shows a strengthening economy and real estate market, specialists said.

“The drop in foreclosures is a signal that the economy is strengthening and that’s the first sign of a stronger 1995,” said Boyd Martin, chairman of Market Profiles, a Costa Mesa consulting firm.

Martin said while the local real estate market took a hit during the first quarter when the number of home sales dropped, the reduction in the number of foreclosures is a good indicator that the county will soon be in a stronger economic position.

While northern Orange County cities still reported an increase in the number of foreclosures--with some cities such as Placentia showing an 85.7% rise, to 26 properties from 14--cities in South County showed improvement. The city of San Clemente saw the number of foreclosures drop 40.2%, to 55 properties from 92 during the last quarter of 1994, TRW REDI said.

“The northern cities, places like Santa Ana, are still showing an increase” in foreclosures, Nattagh said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Foreclosures Decline

Orange County foreclosures during the first three months of the year were the lowest for any of the last five quarters. The third consecutive quarter of decreased activity brought the January-March period in 2% below the number recorded in last year’s comparable period. Commercial and residential foreclosures:

1994 1st qtr.: 1,486 2nd qtr.: 1,575 3rd qtr.: 1,518 4th qtr.: 1,491

1995 1st qtr.: 1,456

Nearly 25% of the county’s first-quarter residential / commercial foreclosures took place in two cities, Santa Ana and Anaheim. The comparison by city / area:

1994 1995 % change Anaheim 98 103 5.1 Anaheim Hills 37 35 -5.4 Brea 14 6 -57.1 Buena Park/La Palma 39 52 33.3 Costa Mesa 56 43 -23.2 Cypress/Los Alamitos 26 20 -23.1 Dana Point 42 28 -33.3 El Toro/Lake Forest 83 77 -7.2 Fountain Valley 21 25 19.0 Fullerton 48 52 8.3 Garden Grove 85 76 -10.6 Huntington Beach 92 59 -35.9 Irvine 66 53 -19.7 Laguna Beach 28 24 -14.3 Laguna Hills 52 53 1.9 Laguna Niguel 57 40 -29.8 La Habra 26 28 7.7 Mission Viejo 27 22 -18.5 Newport Beach 34 30 -11.8 Orange/Villa Park 40 63 57.5 Placentia 14 26 85.7 San Clemente 92 55 -40.2 San Juan Capistrano 50 48 -4.0 Santa Ana 189 252 33.3 Stanton 25 28 12.0 Tustin 40 47 17.5 Westminster 57 43 -24.6 Yorba Linda 24 34 41.7 Not classified 24 34 Total 1,486 1,456 -2.0

Source: TRW REDI Property Data