ARE FORECLOSURES ON THE HORIZON?
With the CARES Act and eviction moratorium due to expire December 31st, many people falsely believe that an abundance of homes will become foreclosures as homeowners begin to default on their mortgages. This theory has a hypothetical flood of homes arriving and thereby driving real estate values down. We couldn’t disagree more. No one explains it better than our local housing expert Michael Orr:
“People who are worrying about mortgage delinquency rates should remember that foreclosures did NOT create the huge excess supply of 2006. The excess supply arrived 2 years before the foreclosures started in earnest. When the bank owned homes hit the market, it was already dreadfully over-supplied, so their prices dropped sharply. If we saw a new wave of distressed homes right now, they would be soaked up very quickly by eager buyers and prices would continue to rise. It would help move the market back to a more normal balance, so prices would rise at a more moderate pace. Most distressed homes would be unlikely to get to foreclosure because almost all of them have substantial owner equity and can be marketed as normal sales, or at worst pre-foreclosures…”
Buyers: If you are thinking of buying, buy as soon as you can. Rental rates have risen 17% in the last year and interest rates are at record lows. Rising pricing is not your friend. Buy now.
Sellers: The immediate future looks very rosy for sellers. Almost all sellers have equity. If you are facing a delinquency on your mortgage – contact us. From our experience sellers out of unwarranted embarrassment, often wait much longer to discuss options than they should. We are here to help, not judge.
Here’s to a brighter 2021 for all.
Russell & Wendy