Foreclosures are up… but they’re down. Wait what? 2021-10-26
Gulf Coast Real Estate Update
October 26th, 2021
Foreclosures are up… but they’re down.
Wait what?
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.
Source: ATTOM Data
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 Continue to Climb
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.
