It's the first time in six years California is not number one in the country.
Merced County has often had one of the highest foreclosure rates in the state, and even the country over the past few years. But now the numbers have dropped dramatically.
It's getting harder to find foreclosed homes in Merced County. In 2009, one in every ten houses had a foreclosure filing, making it number one in the state.
Realty Trac says last month that number decreased to one in every 919, putting the county 39th in California.
Merced County Realtor Andy Krotik said, "More banks are doing loan modifications and short sales, so they're not being foreclosed on, and that has caused tremendous upward pressure in the value of houses."
Experts say one big reason for the drop in foreclosures is state legislation that took effect January 1, 2013.
Realtor Andy Krotik said, "The home owner's bill of rights outlawed dual track foreclosures, which means a bank has to pick a path. They either have to go down the path of foreclosure or go down the path of loan modification or short sale."
Krotik says that's cut the supply of houses on the market and increased the average price in Merced County about 16 percent in the last year alone. Homes are now selling faster as well.
Maria Nannette Suico of Atwater said, "Since we live in here there are just few houses that are on sale, and the signs were up for two to three weeks, and then they're sold."
Krotik says the lack of inventory is also leading to some new home construction a welcome sight for people living in unfinished subdivisions.
"There's a huge area adjacent to this neighborhood that no houses were up yet, so if the economy bounce back that would be good," Krotik said.
It may also be good news for prospective buyers who are now forced to act fast.
"The days of going home to go and sleep on it are over. If you see something you like you better make an aggressive offer," Krotik said.
Realtors say we could still see a second wave of foreclosures in the future, but they don't expect it to be as significant as once thought because of the legislation that took effect this year.