The number of homeowners entering the foreclosure process in California last quarter fell to the second-lowest level in seven and a half years, a new report from analytics firm DataQuick claims.

Lenders filed 20,314 notices of default from July through September in California. That's down 21.1% from 25,747 filings during the previous quarter and a 58.6% drop from 49,026 filings in the first quarter of 2006.

A strong job market, home price appreciation and a variety of government foreclosure avoidance efforts helped drop foreclosure filings to their lowest level since 18,568 were filed in the first quarter of this year.

However, the significant drop at the beginning of 2013 was in correlation with the initiation of the Homeowner Bill of Rights, which took effect on Jan. 1.

"When the Homeowner Bill of Rights took effect in January, foreclosure activity dropped 40% in one month, from December to January. That was the biggest one-month drop in California foreclosure activity we’ve seen since we began tracking foreclosure activity in 2005," said Daren Blomquist, vice president with RealtyTrac.

"Foreclosure activity was already naturally declining in California prior to the new legislation, but at an average 1% decline per month. After the legislation took effect, we have seen an average 2% decline per month in California foreclosure activity. The average pace of decline doubled," he said.

Additionally, the steep rise in home values in the state over the last year has reduced the number of Californians who owe more than their homes are worth. As a result, it drives down the number of households facing the threat of foreclosure.

The median price of a California home hit $360,000 during the third quarter, up 4% from $346,000 the previous quarter and up 26.3% from $285,000 the same period a year ago.

On primary mortgages, by the time a notice of default is filed, the median California borrower is 8.2 months behind on their payments and owes a median of $16,327 on a mortgage of $300,000.

Among the state’s larger counties, loans were least likely to go into default last quarter in San Francisco, Santa Clara, San Mateo, Marin and San Luis Obispo counties.

Meanwhile, the probability was highest in Riverside, San Bernardino, San Joaquin, Kings and Yuba counties.

"Cleanup of the foreclosure mess is ongoing, but it’s difficult to imagine a huge new wave," said John Walsh, president of DataQuick.

"Still, it’s certainly possible that we could see foreclosure activity edge higher again," he added."It will depend on the economy and how lenders manage their remaining distressed properties."