A report released today by First American CoreLogic found that the risk of foreclosure jumped 22 percent from last January, and 9 percent from just three months ago.
The company rates foreclosure risk in 381 metropolitan areas, measuring economic factors such as the direction of home prices and the prospect of job growth.
“Before, it was all about the economy. Now, price drops are overcoming economic conditions,” said Mark Fleming, Core Logic’s chief economist, in a statement.
Core Logic economists believe foreclosures will continue to rise over the next 18 months, with the hardest hit areas in Central California.
Five of the top 10 major cities facing the highest risk of foreclosure over the next six months are in California, while 22 of the 36 markets nationwide facing double-digit home price declines are in the state.
Bakersfield, California was rated the highest risk market among the 100 largest metro areas, with home prices falling 16.9 percent during the past year, according to First American Loan Performance.
“Volatility in these places is high, especially on the down side,” Fleming added.
Nearby Stockton, CA and Fresno, CA rounded out the top three cities facing the highest risk of foreclosure, largely because of oversupply and falling home prices.
In related news, the Commerce Department said sales of new homes dropped by 26.4 percent last year to 774,000, surpassing the 23.1 percent fall in 1980 and marking the worst sales year on record.
The report also revealed that the median price of a new home rose just 0.2 percent to $246,900, the weakest performance since prices fell by 2.4 percent during the 1991 housing slump.
Despite a slight rise in the median home price for the entire year, the median price of homes sold in December was $219,200, a 10.4 percent decline from a year ago and the largest 12-month price drop in 37 years.