Foreclosure starts in California rose 38.7% from the first to second quarter, but still hover at their second-lowest level in seven years, DataQuick reported.

Homeowners in the state have rising prices and new legislation to thank for the dramatic slowdown in default notices.

The La Jolla, Calif.-based real estate data firm said 25,747 notices of default were filed in the April-to-June period, up 38.7% from 18,568 filings in the prior quarter and down 52.9% from 54,615 filings a year earlier.

The notices of default filed in the first quarter of 2013 marked the lowest quarterly total since 2005, making the most recent report the second lowest quarterly total in seven years.

It’s possible new foreclosure legislation in the state is the cause of the slowdown.

The Homeowner Bill of Rights took effect in California on Jan. 1, creating a private right of action for foreclosure plaintiffs to sue financial firms for violating one of the law’s many provisions.

“In California and other states in recent years foreclosure activity has sometimes plunged temporarily after a new law kicks in and the industry takes time to adjust,” DataQuick explained.

On the other hand, home prices are rising, and as they go up, homeowners have more leverage to save their properties.

The median price for a California home hit $344,000 in the second quarter, up 14.7% from $300,000 in the first quarter and a 27.4% jump from $270,000 in the second quarter of 2012.

The state’s median home price during the market bubble reached $485,500 in 2007.

Mortgage defaults in California continue to hit more affordable neighborhoods first, with zip codes featuring homes in the $200,000-price range reporting 4.2 notices of default for every 1,000 homes.

That compares to 2.8 notices per every 1,000 homes when analyzing the $200,000-to-$800,000 price range. And, in the above-$800,000-range, 1.1 notices are filed per every 1,000 homes.

California foreclosure starts fall to second-lowest level in 7 years | HousingWire.