Wednesday, November 11, 2020 / by Vanessa Saunders
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
Will we be facing a wave of foreclosures in the coming months that will drive down home prices and send the real estate market into another 2009 crash? At first glance, the numbers don't look good for real estate. In August, CoreLogic reported that 6.6 percent of mortgages were in some state of delinquency — a 2.9 percent rise from the same time last year.
This paints a disturbing picture of our current economic situation amid the corona virus outbreak. Pandemic-related unemployment still hobbles the unemployment rate. Many homeowners are not bringing in the income necessary to make up missed payments. Others who may be current are also one or two payments away from disaster.
Government forbearance programs can help those in late stage keep their homes for now, the end of those programs may throw many more into foreclosure.
But the numbers deserve a second look. According to Black Knight Inc., the number of those in active forbearance has been leveling-off over the past month. Black Knight Inc. also notes, of the original 4,208,000 families granted forbearance, only 2,588,000 of these homeowners got an extension. Many homeowners have once again started to pay their mortgages, paid off their homes, or never went delinquent on their payments in the first place. They may have applied for forbearance out of precaution, but never fully acted on it.
While ATTOM Data Solutions indicates that there is a potential for the number of foreclosures to increase throughout the country, they argue that it’s important to understand why they won’t rock the housing market this time around:
ATTOM points out, the number of distressed properties is much smaller than it seems at first glance. Today’s actual quarterly active foreclosure number is 74,860. That’s over 7.5x lower than the number of foreclosures the country saw at the peak of the housing crash in 2009. But comparing today’s relatively low foreclosure rate to the worst flood of foreclosures since the Great Depression paints too rosy a picture.
Frank Martell, president and CEO of Core Logic gives us a longer view of the market’s future. “Forbearance programs continue to reduce the flow of homes into foreclosure and distressed sales, and have been the key to helping many families who have been particularly hard hit by the pandemic. Even though foreclosure rates are at a historic low, the spike in 150-day past-due loans points to bumpy waters ahead.”
Contact us at Global Property Systems for more information about the New York housing market, or to find or sell a Hudson Valley home.