Foreclosures remain the story behind the real estate market.

According to DataQuick, The number of California homes going into foreclosure jumped last quarter to its highest level in more than 15 years.

One caveat here about these numbers. Whenever a notice of default is filed, it is added to any other notices of default already filed. For instance, if a property has a first loan, a second loan and a third loan, then three notices are filed on the same property.

Also, included in these numbers are: the initial notice of default, the notice of foreclosure auction, and the notice of REO (lender-owned real estate that occurs after a foreclosed property fails to sell at auction and reverts back to the lender).

Makes one wonder about the veracity of these numbers, doesn’t it?

Look at the numbers report by Dataquick for Notices of Default files in the first quarter of 2008 for California: 113,676.

ForeclosureS.com reports 120,684 notices of default filed in the first quarter.

The question is, how many of these homes actually get foreclosed?

ForeclosureS.com reports that in the first quarter of this year, there were 14,472 REO filings. So, roughly 12% of the homes that are in pre-foreclosure actual go through with it. We’re ignoring the foreclosure sales at court auction because there are very few of those.

“The foreclosure numbers and much of the economic news today sound scary, but let’s get some perspective,” says Alexis McGee, foreclosure information expert, educator, and president of ForeclosureS.com.

“Total outstanding U.S. mortgage debt totals more than $10 trillion! Foreclosures are a drop in that bucket,” McGee adds.

Also, says McGee, some of the “bad” economic news is actually good news long-term for housing markets:

Continued drops in housing starts and construction spending signal recognition that oversupply must catch up with demand.

New-home sales are down nearly 60% from their July 2005 peak, but overinflated prices fueled that peak.

Foreclosures and pre-foreclosures are way up, but many are the result of subprime loans that shouldn’t have been made in the 1st place.

“Markets will rally back to reality in the coming months as liquidity continues to improve and the economy picks up,” adds McGee.