Four reasons why it is unlikely that we’ll see lots of foreclosures.
A question we keep getting is: “Will the end of forbearance cause a wave of foreclosures to hit the market like what we saw in 2007?” It’s unlikely because of these four reasons:
1. There are fewer mortgages in default. In 2007, there were 9.3 million foreclosures or short sales. As of July of 2021, there were only 1.8 million houses at risk of foreclosure.
2. Most properties in forbearance have equity. Of that 1.8 million, about 87% have 10% or more equity in their home. These homeowners could sell their homes and still make a profit if needed.
3. The government will implement programs to ease foreclosures. Some government loans are already letting people roll back their missed payments.
4. Inventory is so low that the market would easily absorb those foreclosures. In 2008, as foreclosure started to ramp up, we already had several months of supply in our area. That’s what caused the problem.
If you have any questions about the market or need real estate advice, please reach out to us any time via phone or email. We’re happy to help.