What will happen now that the moratorium on foreclosures has ended?
How will more foreclosures affect the real estate market? Now that foreclosures are up 187%, many realtors and homeowners are questioning the stability of the real estate market. They’re asking, are we about to see a tsunami of foreclosures and a struggling real estate market similar to what we saw in 2008? The short answer is no—foreclosures will start to increase again, but it is expected and there is nothing to worry about.
Due to the combination of government support, low interest rates, and eager homebuyers, we experienced a housing boom. However, the various foreclosure moratoriums that protected people from financial disruptions during the pandemic are now ending, and the number of foreclosures is now returning to a normal pre-pandemic level.
Also, due to the minimal number of foreclosures in the last few years, the large percentage increases that we’re now seeing look alarming on their own, but in context, this spike is momentary as things return to normal levels. Despite all the negatives that we hear, such as inflation and geopolitical issues, foreclosure rates are actually still below where they were in 2019. Additionally, homeowners nationwide now have considerably more equity built in their homes than they did in 2008.
“Buyers will start to have more options available to them.”
Foreclosures can alleviate our historically tight housing market. There are only 1.37 million units currently available for sale, which is the lowest inventory level on record. It’s the tightest housing market we’ve ever had. With foreclosure rates returning to pre-pandemic levels, inventory rising, and buyers starting to have more options available to them, the real estate market will slowly move, and it will take multiple months for these foreclosure increases before buyers can really see a good number of people.
If you have any questions about the end of forbearance programs, the rise in foreclosures, or anything else about our shifting market, don’t hesitate to reach out by phone or email. We’re happy to help. Happy holidays!
