The number of mortgage default notices filed against California homeowners fell last quarter for the first time in three years as a change in the state’s formal foreclosure process took effect. We can expect to see the foreclosure numbers for the East Bay bounce back in October and November.

California home sales were up 6.1% in September 2008 over September 2007. Over 51% of resale homes in September were foreclosures.

Bay Area home sales were up 45% over September 2007 but the median home price dropped to $400K. Foreclosure sales in Contra Costa County contributed to a 10% increase in market share for home sales from counties with large inventories of foreclosures. Foreclosures accounted for 58.7% of homes sold in Contra Costa County while  foreclosures sales accounted for 37.9% of sales in Alameda County.

Moreover, nearly 42 percent of all existing homes sold across the Bay Area last month had been foreclosed on at some point in the prior 12 months, up from 36.1 percent in August and 6.9 percent a year ago. Foreclosures tend to sell at a discount and are concentrated in relatively affordable neighborhoods.

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