Although California’s foreclosure rate skyrocketed in the second quarter, it’s still unclear how bad this is. It’s certainly not good, however, despite the rising foreclosure rate, foreclosures remain below normal.

In the April-June period, lenders sent 20,752 default notices to homeowners, up 67.2% from the same period last year. When a homeowner receives a notice of default, foreclosure is still a long way off. After the first notice of default, the homeowner may still have a number of options before losing their home to foreclosure. The notice of default is sent to a homeowner who is behind on their mortgage payments.

These statistics have been compiled by the DataQuick company since 1992. The jump in breach notices is the largest since DataQuick began compiling these statistics.

The quarterly peak in delinquency notice files was recorded in the first quarter of 1996, when 59,897 notices were sent to homeowners.

There are a number of other factors that need to be looked at. These include the amount of equity the homeowner has in the home and the type of mortgage they have. This default activity is worth watching, but it doesn’t necessarily mean the housing market is about to crash.

Of homeowners who receive notices of delinquency, only about 7% foreclose and lose their homes. It’s not like the market is going to be flooded with foreclosed homes. However, price appreciation is slowing down quite a bit. Homeowners who depended on that appreciation to continually refinance and raise equity are the ones who will feel the pain. For investors, the market deserves a close watch.

Marshall Prentice, president of DataQuick, believes the default rate would have to nearly double before home values ​​take a hit. Rising defaults are slowing home value appreciation. In San Diego and Sacramento home values ​​are flat. These are two areas in California that saw appreciation rates skyrocket. San Diego and Sacramento are two areas in California that are vulnerable to falling home prices.