Foreclosure filings dropped sharply around the Bay Area in August, while investors bid up prices for homes sold at courthouse auctions, according to a report released Tuesday.
Cash-paying investors are also bidding on more expensive homes than they did a year ago, ForeclosureRadar said in a monthly report on foreclosure activity. That is making it difficult for regular buyers to clinch a deal.
There were double-digit increases in prices paid for foreclosures in the South Bay and East Bay, ranging from an 11 percent increase in Santa Clara County to a 31 percent price increase in San Mateo County.
Prices paid for foreclosed homes rose in August to $426,000 in Santa Clara County, $316,000 in Contra Costa County, $333,000 in Alameda County and $535,000 in San Mateo County, the Discovery Bay foreclosure tracking company said.
"This is absolutely a direct response to the lack of inventory throughout the Bay Area," said Michelle Lenahan of ForeclosureRadar. "Every property on the market is subject to multiple offers."
Total foreclosure sales -- purchases by third parties and homes that are taken back by the bank -- were up about 16 percent for August in all four counties, but down sharply from a year ago, with drops ranging from 41 percent in Alameda County to 51.5 percent in Santa Clara County.
There are also fewer homes for sale in the general housing market because so many people are underwater on their mortgages
"Everything is multiple offers," said Steve Mun with Keller Williams in Cupertino. "It's not that the property is that much better, it's that there's not that much available."
He said first time home buyers, even with good credit and good jobs, "can't compete with cash buyers who have people waiting in line for a place to rent .''
Lenders kept default filings down as they continued working out loan modifications or short sales -- sale of a property for less than the amount of the mortgage -- with struggling homeowners.
Those efforts have been boosted by a national mortgage settlement reached with five major lenders early this year, in which the lenders agreed to help struggling homeowners with principal reductions, loan modifications and other relief.
Notices of default -- the first step in the foreclosure process -- were down from July in all four counties, with drops ranging from 24 percent in Santa Clara County to almost 9 percent in San Mateo County. There were steep declines from a year ago -- down 56 percent in Santa Clara County and 46 percent in Contra Costa County.
"I think they're making a good faith effort to use every other option but foreclosure," said Colleen Badagliacco with Altera Real Estate in San Jose.
Cancellations or postponements of foreclosure sales by lenders have increased in recent months. In August, for example, there were 470 cancellations of sales in Contra Costa County, up 12 percent from July.
Contact Pete Carey at 408-920-5419