Have you been looking around the housing market and thinking “There goes the neighborhood”? Well, you are not alone. In May of this year, ATTOM recorded a sharp uptick in foreclosure rates around the United States. Adding up notices of default, repossession by banks and auctions on the calendar, the U.S. Foreclosure Market Report found 35,196 American properties with foreclosure filings.
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Forclosure is never a good sign — back in 2008 and 2009, it was a stark symbol of the Great Recession. This current data set shows a 7% increase from April, but twice that much from 2022, with 14% by comparison. However, taking into account all that foreclosures mean, analysts can use the data to predict real estate trends going forward.
Why Foreclosures Now?
Talks of another recession have been going on for the better part of two years. Does this spike in foreclosures signal another one? And if so, why now? There are main factors, but one that’s been around for a little while now: COVID-19.
“…the lifting of all COVID-19 related moratoriums that have finally unclogged the pipeline of distressed properties,” said Kristen D. Conti, the co-chairwoman of Default Industry Leaders. “Those people who chose to take advantage of programs where they could not pay their mortgages and put the payments on the back end of the loan are now faced with homes whose prices are leveling out and they find themselves underwater.”
“The escalation of prices put many marginal buyers at the very top of their qualifying range,” Conti said. “Any change affecting household income can be catastrophic right now as prices become more prevalent and prices decrease.”
And there are some telltale signs that more bad news might be on the way.
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Source: finance.yahoo.com
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