This is great news since California tends to lead the way for market trends.

The number of home owners in California entering foreclosure in the second quarter dropped to a three-year low, according to research firm MDA DataQuick.

Default notices, the first step in the foreclosure process, fell 43.8 percent in the second quarter compared to the same period last year.

Analysts say the decline is due to banks pushing loan-modification programs and short sales. Also, fewer homes are underwater thanks to a recovery in home prices, so a smaller number of home owners are walking away.

Ironically, regions of the state where homes are cheapest are most likely to see the highest number of default notices. According to DataQuick, neighborhoods with a median sales price of less than $300,000 experienced 10.6 default notices for every 1,000 homes, while neighborhoods with prices above $800,000 accounted for 2.9 notices for every 1,000 homes.

Source: Los Angeles Times, Alejandro Lazo (07/22/2010)