No Wave of Foreclosures this Time

Why a Wave of Foreclosures Is Not on the Way

With forbearance plans coming to an end, many are concerned the housing market will experience a wave of foreclosures similar to what happened after the housing bubble 15 years ago. Here are a few reasons why that won’t happen.

There are fewer homeowners in trouble this time.

After the last housing crash, about 9.3 million households lost their homes to a foreclosure, short sale, or because they simply gave it back to the bank.

Why a Wave of Foreclosures Is Not on the Way | MyKCM

As stay-at-home orders were issued early last year, the fear was the pandemic would impact the housing industry in a similar way. Many projected up to 30% of all mortgage holders would enter the forbearance program. In reality, only 8.5% actually did, and that number is now down to 2.2%.

As of last Friday, the total number of mortgages still in forbearance stood at  1,221,000. That’s far fewer than the 9.3 million households that lost their homes just over a decade ago.

Most of the mortgages in forbearance have enough equity to sell their homes

Due to rapidly rising home prices over the last two years, of the 1.22 million homeowners currently in forbearance, 93% have at least 10% equity in their homes. This 10% equity is important because it enables homeowners to sell their homes and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.

The remaining 7% might not have the option to sell, but if the entire 7% of those 1.22 million homes went into foreclosure, that would total about 85,400 mortgages. To give that number context, here are the annual foreclosure numbers for the three years leading up to the pandemic:

  • 2017: 314,220
  • 2018: 279,040
  • 2019: 277,520

The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures that impacted the housing crash 15 years ago. It’s actually less than one-third of any of the three years prior to the pandemic.

The current market can absorb listings coming to the market

Why a Wave of Foreclosures Is Not on the Way | MyKCM

When foreclosures hit the market back in 2008, there was an oversupply of houses for sale. It’s exactly the opposite today. In 2008, there was over a nine-month supply of listings on the market. Today, that number is less than a three-month supply. Here’s a graph showing the difference between the two markets.

Bottom Line

The data indicates why Ivy Zelman, founder of the major housing market analytical firm Zelman and Associates, was on point when she stated:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

It is my true pleasure to  work hard for my clients and your referrals throughout Massachusetts, Rhode Island, and Cape Cod.  Please let me know what questions you may have and how I can be of the best assistance to you.

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Jennifer McMorran, Realtor, SRES
New Construction & First Time Home Buyer Specialist
MA, RI, and Cape Cod & Islands Licensed Real Estate Sales Associate
New Homes Team Kensington Real Estate Brokerage
508-930-5259
Jen.McMorran@gmail.com
www.jenmcmorran.realtor
real people. real estate. 


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Low Listing Inventory – List Now!

photo 1 (2)List now! List now!

Listing inventory
of desirable homes is low!!

Yes, there are listings on the market now that have been lingering for months without selling.  Unfortunately that is because they failed to appeal to buyers either by price or presentation when first going on the market.  Don’t let these sellers influence you… if you are ready to make a move, this is a great time to put your home on the market … buyers are looking for great homes and not finding them.  (No kidding, I was working throughout the holiday week with buyers checking out anything that we thought had “potential”.)

According to KCM:
Buyer Demand Continues to Outpace the Supply of Homes For Sale
The National Association of REALTORS’ (NAR) Chief Economist, Lawrence Yun recently commented on the inventory shortage:
“While feedback from REALTORS® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.”

If you are thinking about making a move this year, this may be the perfect time of year to get your home listed and sold.  Too many home owners wait until the Spring and end up losing out when other homes are also hitting the market to compete for buyers.  List your home now and be sure it will stand out in a less crowded market.  Low inventory and my marketing strategies… it is sure to sell.

If you are committed to making a move, I strongly urge you to get your home listed and sold, then let’s get you into temporary housing.  Initially it may not sound appealing, but how does a carefree winter from shoveling snow sound? Plus you will be much more marketable as a buyer in the spring as you will be presenting offers that are not contingent on you selling a house.  Ahh… the joys of the non-contingent buyer… you are going to love the step up it will give you against other buyers when the busy housing market hits.  And, you will also love the flexibility  you’ll have to go after that perfect listing as soon as it hits MLS for sale.

Happy to chat or help in any way whether you interested in buyer or selling!  My goal is to enable buyers and sellers to make the decisions that are right for them.

Jen McMorran, RealtorJennifer McMorran, Realtor
New Construction Specialist
508-930-5259
Jen.McMorran@gmail.com
www.jenmcmorran.realtor

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real estate for real people.

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