In Merced, the foreclosure rate dropped to just more than one-percent in September. That's compared to more than two-and-a-half-percent in 2012, and nearly four-percent in 2011.
But now, there's added pressure for those who can't avoid a foreclosure or short sale. The "Mortgage Forgiveness Debt Relief Act of 2007" is set to expire at the end of this year.
The provision allowed homeowners not to pay income taxes on cancelled or forgiven debt. But one local expert does not believe the expiration will have a big impact on the Valley's housing market.
"No I don't believe there's any big shadow inventory that's going to the hit the market. Maybe a trickle, maybe a slow stream, but the big wave of foreclosures is behind us."
The IRS recently clarified in a letter that most Californians who do short sales, will still not be required to pay an income tax because of an existing state law.