You may have seen the headlines…

Foreclosure’s surge 67%.

 

Well for a little perspective, that’s 67% higher than the third quarter of 2020. Loan forbearance and pandemic related accommodations brought the foreclosure rate in 2020 to the lowest it’s ever been since they started collecting data. Historically, mortgage foreclosure starts number around 40,000 per month that number fell as low as 3,000 to 4,000 in the first year of the pandemic when forbearance programs were in full force. We’re up 67% but that is up from a record low.

This chart provided by ATTOM Data Solutions provides perspective. 

So, despite increased level of foreclosure activity we’re still far below historical norms.
September foreclosure actions were almost 70% lower than they were pre-pandemic and total foreclosure activity is also still 60% lower than it was a year ago.

Forbearance is coming to a close and the majority of people coming out of these plans are once again current on their payments or are working with lenders on modifications. Those who do not work with their lenders and can’t make payments can sell or go into foreclosure. Most will sell as prices are up 18% year over year and home equity is a record high levels.

Mortgage rates continued to rise this week due to the trajectory of both the economy and the pandemic. Even as the availability of existing homes is improving, prices remain high due to homebuyer demand and limitations on housing starts and permits resulting from the ongoing labor and material shortages. Despite these countervailing forces, we expect the housing market to remain strong as we head into the end of the year.

Doiron Realty Services
Pete Doiron
Broker

13800 Park Blvd. Suite 207
Seminole FL 33776
727-391-2829

 

 

This year a record number of deals have fallen through due to appraisals not meeting the agreed upon contract price. In some months 19% of appraisals came up short according to a CoreLogic study of the US market.

Mortgage lenders agree to lend a percentage of the sale price or the appraised value whichever is lower. If the appraisal comes up short, the buyer can make up the difference with a higher down-payment or may cancel the contract based on a mortgage contingency. When home prices are rapidly appreciating recent sales of comparable properties don’t keep up with the market. For example, if home values are going up 18% annually that’s 1.5% per month. Appraisals are based on recent closed sales so if a property gets listed in June goes to contract by the end of the month, then stays in escrow for 30 or 60 days you’ve got nearly three and a half months before that property becomes a comparable sale that can be used in an appraisal. Then it will be a comparable sale for another 90 days going forward. These factors alone can easily make an appraisal come in short by 5% to 10% of the sales price.

It’s interesting because a record number of deals are actually closing for cash here in Pinellas County and cash deals don’t require an appraisal. In last 30 days 40% of all residential transactions in Pinellas County closed for cash. In our beach communities the numbers are even higher with 57% of all deals selling for cash. So, cash buyers are making the market and the appraisers are struggling to keep up.
 

The 30-year fixed-rate mortgage rose to its highest point since April. As inflationary pressure builds due to the ongoing pandemic and tightening monetary policy, we expect rates to continue a modest upswing. Historically speaking, rates are still low, but many potential homebuyers are staying on the sidelines due to high home price growth. Rising mortgage rates combined with growing home prices make affordability more challenging for potential homebuyers.

Doiron Realty Services
Pete Doiron
Broker

13800 Park Blvd. Suite 207
Seminole FL 33776
727-391-2829

 

 

Momentum is still building in the housing market. Pending home sales jumped 8.1% in August — far exceeding analyst expectations for around 1% growth. Pending sales, or signed contracts, had cooled during the prior two months, though remained above pre-pandemic levels. Home prices surged over the back half of last year and the first part of this year.

Mortgage Rates Jump Above 3%

Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June. Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages which compound other labor and materials shortages. We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.

Doiron Realty Services
Pete Doiron
Broker

13800 Park Blvd. Suite 207
Seminole FL 33776
727-391-2829