According to the latest report from Black
Knight, Inc., a well-respected provider of data and analytics for
mortgage companies, 6.48 million households have entered a forbearance plan
as a result of financial concerns brought on by the COVID-19 pandemic. Here’s
where these homeowners stand right now:
This shows that of the almost 3.72 million homeowners who have
left the program, only 116,000 (2%) exited while they were still behind on
their payments. There are still 2.77 million borrowers in a forbearance
program. No one knows for sure how many of those will become foreclosures.
There are, however, three major reasons why most experts believe there will
not be a tsunami of foreclosures as we saw during the housing crash over a
decade ago:
Will there be foreclosures coming to the market? Yes. There
are hundreds of thousands of foreclosures in this country each year. People
experience economic hardships, and in some cases, are not able to meet their
mortgage obligations. Here’s the breakdown of new foreclosures over the last three
years, prior to the pandemic:
Through the first three quarters of 2020 (the latest data
available), there were only 114,780 new foreclosures. If 10% of those
currently in forbearance go to foreclosure, 275,000 foreclosures would be
added to the market in 2021. That would be an average year as the numbers
above show. What happens if the number is more than 10%?
If we do experience a higher foreclosure rate from those in
forbearance, most experts believe the current housing market will easily
absorb the excess inventory. We entered 2020 with 1,210,000 single-family
homes available for purchase. At the time, that was low and problematic. The
market was experiencing high buyer demand, and we needed more houses to meet
that demand. We’re now entering 2021 with 320,000 fewer homes for sale, while buyer
demand remains extremely strong. This means the housing market has the
capacity to soak up a lot of inventory. Bottom Line
There will be more foreclosures entering the market later this
year, especially compared to the record-low numbers in 2020. However, the
market will be able to handle the increase as buyer demand remains strong. |
It's a Good Life!!!
|