"New homes are starting to emerge, the REOs are declining, so it's a natural transition to a more healthy market," Johnson said.
Market returning to 'normal'
The Coachella Valley housing market hasn't reached a "normal" state yet, but it's on its way there, analysts said.
Overall foreclosure activity is down. In May, there were 231 foreclosure filings on Coachella Valley properties, down 5.3 percent from April and down 18.7 percent from one year ago, according to RealtyTrac, an Irvine-based real estate information services firm.
California foreclosures receive three filings: a notice of default, a scheduled public auction and a bank repossession, if the owner fails to pay what is owed during default.
However, year-over-year bank repossessions slightly rose. In May, there were 54 REOs compared to 52 one year ago, according to RealtyTrac.
The year-over-year increase has become a three-month pattern across California, said Daren Blomquist, vice president of RealtyTrac. In the Inland Empire, REOs were up after 16 months of declining bank repossessions.
"It's an increase after two years of decreasing activity, and that's what we've been expecting," Blomquist said. "We do believe that there's shadow inventory in California, that the banks have been holding back from foreclosing on."
Programs intended to help homeowners facing foreclosure, such as the California Homeowner Bill of Rights, delayed the inevitable for many properties, Blomquist said.
"It's much smaller than the crisis of 2009 and 2010, but there is pent-up, delayed foreclosures that need to be dealt with," he added.
The foreclosure rate for the Riverside-San Bernardino area ranks among the top 20 metro areas in the country. One in every 622 housing units have a foreclosure filing.
In May, 92 homes received a notice of default in the desert. That's up 3 percent from April but down 23 percent from one year ago. Palm Springs homes had the most notices of default in the desert in May. There were 11 in the north end, and 12 in the south.
"Normal" varies from market to market. In the Inland Empire, in the worst year in 2009, 8.8 percent of housing units had a foreclosure filing.
In 2013, that number dropped to 1.6 percent of housing units. It's now nearing 1.3 percent, the rate during the 2006 housing boom. Nationally, during a healthy market, the foreclosure rate hovers at about 1 percent, Blomquist said.
"We don't expect foreclosures to completely go away," Blomquist said. "It's just a consequence of people borrowing money to buy homes."
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