38% of all California resale activity in the fourth quarter of 2010 consisted of real estate owned (REO) inventory — 3% lower than the same period in 2009. The ratio of REO resales relative to all resales varied significantly from county to county, from rates as low as 11% in San Francisco County to as high as 57% in Merced County.

69,799 Notices of Default (NODs) were recorded in California in the fourth quarter of 2010, down 17% from 84,568 in the fourth quarter of 2009. The regions with the most low-tier properties saw the greatest decreases.

This is the lowest number of NODs issued in any quarter in 2010. NOD volume peaked in the first quarter of 2009 with 135,431 NODs recorded. 2010’s peak was the second quarter, with 47,473 NODs recorded.

Also in the fourth quarter 2010, a total of 35,431 homes went to trustee’s sale. This is down from 45,377 in the third quarter of 2010, and 51,060 foreclosures in the third quarter of 2009.

Both high- and low-tier properties saw significant decreases in total foreclosures. Statewide, high-tier regions (ZIP codes with median home prices higher than $800,000) saw a 16% drop in foreclosures from the second quarter of 2010, and a 17% drop over the same quarter of 2009. Foreclosures in low-tier areas (ZIP codes with prices lower than $200,000) dropped 26% from the third quarter of 2010, and 34% from 2009. However, less expensive neighborhoods continue to see the highest concentration of NODs and foreclosures.

Most recent data indicates that it takes an average of nine months to complete a trustee’s sale following the recording of the NOD. One year earlier, foreclosure proceedings generally elapsed over an average period of seven months. MDA Dataquick, a real estate information service, sees the extended processing time as a product of lender backlogs combined with the pursuit of loan modifications and short sales to circumvent foreclosure.

It is estimated that 22% of homes sold at trustee’s sales were bought by individuals other than the lender or government groups — down from 25% last year, as speculators start to turn away from the real estate market. [For more information and trends on NOD and NOTS in California, see first tuesday’s Market Chart NODs and Trustee’s Deeds: Grim signs of real estate’s present condition.]

first tuesday take: Foreclosure numbers show a meaningful drop in both foreclosures and NODs: the first such drop we have seen. While it would be premature to call this drop an indicator of recovery, it is encouraging to see that lenders’ harmful behavior of forcing homeowners out of their homes has at least been slowed over the last year. Nonetheless, numerous NODs will come in the future, and thus many potential foreclosures remain on the horizon. first tuesday anticipates foreclosures will remain high throughout 2011 and 2012, and on through 2013, since delinquencies have not yet abated.

Re. “Another Decline in California Foreclosure Activity,” from MDA Dataquick