Will Forbearance Plans Lead to a Tsunami of Foreclosures?

Will Forbearance Plans Lead to a Tsunami of Foreclosures?


Today, almost three million households are actively in a forbearance plan.

Though 29.4% of those in forbearance have continued to stay current on their payments, many have not.

The pandemic has led to both personal and economic hardships for many American households.

The overall residential real estate market, however, has weathered the storm and will continue to do so in 2021.

Presented as a public service by:

Joe Peters of Coldwell Banker January 13, 2021


At the onset of the economic disruptions caused by the COVID pandemic, the government quickly put into place forbearance plans to allow homeowners to remain in their homes without making their monthly mortgage payments. Today, almost three million households are actively in a forbearance plan. Though 29.4% of those in forbearance have continued to stay current on their payments, many have not.

Yanling Mayer, Principal Economist at CoreLogic, recently revealed:

“A distributional analysis of forborne loans’ payment status reveals that more than one third (39.1%) of all forborne loans are now 150+ days behind payment, while as many as 1-in-4 (25.5%) are 180+ days past due.”

These homeowners have been given permission to not make their payments, but the question now is: how many of them will be able to catch up after their forbearance program ends? There’s speculation that a forthcoming wave of foreclosures could be the result, and that could lead to another crash in home values like we saw a decade ago.

However, today’s situation is different than the 2006-2008 housing crisis as many homeowners have tremendous amounts of equity in their homes.

What are the experts saying?

Over the last 30 days, several industry experts have weighed in on this subject.

Michael Sklarz, President at Collateral Analytics:

“We may very well see a meaningful increase in the number of homes listed for sale as these borrowers choose to sell at what is arguably an intermediate top in the market and downsize to more affordable homes rather than face foreclosure.”

Odeta Kushi, Deputy Chief Economist at First American:

“The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock. It is a lack of sufficient equity, the second component of the dual trigger, that causes a serious delinquency to become a foreclosure.”

Don Layton, Senior Industry Fellow at the Joint Center for Housing Studies of Harvard University:

“With a greater cushion of equity, troubled homeowners have dramatically improved options: a greater ability to access funding (e.g. home equity lines) to keep paying monthly expenses until family finances might recover, improved ability to qualify for and support a loan modification, and, if push comes to shove, the ability to sell the home and monetize their increased net worth while reducing monthly payment obligations. So, what should lenders and servicers expect: a large number of foreclosures or only a modest increase? I believe the latter.”

With today’s positive equity situation, many homeowners will be able to use a loan modification or refinance to stay in their homes. If not, some will go to foreclosure, but most will be able to sell and walk away with their equity.

Won’t the additional homes on the market impact prices?

Distressed properties (foreclosures and short sales) sell at a significant discount. If homeowners sell instead of going into foreclosure, the impact on the housing market will be much less severe.

We must also realize there is currently an unprecedented lack of inventory on the market. Just last week, realtor.com explained:

“Nationally, the number of homes for sale was down 39.6%, amounting to 449,000 fewer homes for sale than last December.”

It’s important to remember that there weren’t enough homes for sale even then, and inventory has only continued to decline.

The market has the potential to absorb half a million homes this year without it causing home values to depreciate.

Bottom Line

The pandemic has led to both personal and economic hardships for many American households. The overall residential real estate market, however, has weathered the storm and will continue to do so in 2021.

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Joe Peters Buying Guide January 13, 2021

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Joe Peters of Coldwell Banker January 13, 2021 

Tips to Sell Your House Safely Right Now [INFOGRAPHIC]

Tips to Sell Your House Safely Right Now [INFOGRAPHIC]

 


Your agent now has over 6 months of experience selling houses during the pandemic and can make the process easier and safer for you today.

COVID-19 protocols and technology usage recommendations from the National Association of Realtors (NAR) are making it possible to sell houses right now, while agents continue to abide first and foremost by state and local regulations.

Let’s connect to discuss how to sell your house safely in today’s housing market.

Presented as a public service by:

Joe Peters of Coldwell Banker November 13, 2020


 

Some Highlights

  • Your agent now has over 6 months of experience selling houses during the pandemic and can make the process easier and safer for you today.
  • COVID-19 protocols and technology usage recommendations from the National Association of Realtors (NAR) are making it possible to sell houses right now, while agents continue to abide first and foremost by state and local regulations.
  • Let’s connect to discuss how to sell your house safely in today’s housing market.

 

You can receive my one-minute real estate update each week

by subscribing below:

Joe Peters of Coldwell Banker November 13, 2020


Free Downloads:

Joe Peters Home Buying Guide November 13, 2020Joe Peters Millennial Home Buying Guide November 13, 2020Joe Peters Selling Buying Guide November 13, 2020

 

Hunterdon County Real Estate Market Update November 13, 2020Joe Peters of Coldwell Banker July 10, 2020 Somerset County Real Estate Market Update November 13, 2020

Housing Market on Track to Beat Last Year’s Success

Housing Market on Track to Beat Last Year’s Success

 


After an abrupt shutdown in March, we so dire forecasts for housing.

However, six months later, it seems as though the housing market has fully recovered.

And, its future looks promising.

Presented as a public service by:

Joe Peters of Coldwell Banker September 28, 2020


 

Back in March, as the nation’s economy was shut down because of the coronavirus, many were predicting the real estate market would face a major collapse. Some forecasts called for a 15-20% decline in transactions. However, six months later, it seems as though the housing market has fully recovered.

Mark Fleming, Chief Economist at First American, announced last week:

“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”

The Economic & Strategic Research Group at Fannie Mae upgraded its forecast for home sales last week:

“Housing data over the past month continued to show a strong V-shape rebound, helping drive the broader economy. Existing home sales jumped to a pace not seen since 2006…We have substantially upgraded our forecasts for both new and existing home sales. For 2020, total home sales are now expected to be 1.3% higher than in 2019.”

The National Association of Realtors (NAR) agrees. In their last Pending Sales Report, NAR shared projections from Chief Economist Lawrence Yun:

“Yun forecasts existing-home sales to ramp up to 5.8 million in the second half. That expected rebound would bring the full-year level of existing-home sales to 5.4 million, a 1.1% gain compared to 2019.”

Yun’s forecast for 2021 was even more optimistic, stating, “Home sales will ramp up again next year, increasing between 8% – 12%.”

Bottom Line

The housing market has come roaring back and looks as though it may even surpass last year’s success.

 

 

You can receive my one-minute real estate update each week

by subscribing below:

Joe Peters of Coldwell Banker September 28, 2020


Free Downloads:

Joe Peters Home Buying Guide September 28, 2020Joe Peters Millennial Home Buying Guide September 28, 2020Joe Peters Selling Buying Guide September 28, 2020

 

Hunterdon County Real Estate Market Update September 28, 2020Joe Peters of Coldwell Banker September 28, 2020 Somerset County Real Estate Market Update September 28, 2020

Holiday Gifts Are Not the Only Hot Things Right Now

Holiday Gifts Are Not the Only Hot Things Right Now

Presented as a public service by Joe Peters of Coldwell Banker

Black Friday is behind us and holiday gifts are flying off the shelves in stores and online. Unlike last year, however, there’s another type of buyer that is very active this winter – the homebuyer.

Each month, ShowingTime releases their Showing Index, which tracks the average number of appointments received on active U.S. house listings. The latest index revealed:

“Traffic was more active once again compared to 2018, as the nation saw its third straight month of higher year-over-year showing activity…The 5.5% increase in showings nationwide was the largest jump in activity during the now three-month streak of year-over-year increases vs. 2018.”

The same report indicates showings increased in every region of the country:

  • The South increased by 10.8%
  • The West increased by 8.6%
  • The Northeast increased by 3.8%
  • The Midwest increased by 1.5%

Why is the traffic more active?

One of the main reasons buyer traffic has increased year-over-year is that mortgage rates have fallen dramatically. According to Freddie Mac, the average mortgage rate last December was 4.64%. Today, the rate is almost a full percentage point lower!

Bottom Line

There are first-time, move-up, and move-down buyers actively looking for the home of their dreams this winter. If you’re thinking of selling your house in 2020, you don’t need to wait until the spring to do it. Your potential buyer may be searching for a home in your neighborhood right now.


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