Notice of defaults will imply in fire sales, not foreclosures?

Jul 30, 2021 8 Comments

#mortgage #housing

With the end of the forbearance, owners who receive a notice of default can simply sell their properties, because they all have equity due to appreciation.

A foreclosure can start early next year, if the owner doesn’t manage to sell before that.

This means that Q4 this year will have fire sales in the housings markets.

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 TOP 8 Comments
  • OP
    There’ll be a surge in fixer uppers and bad maintained houses in the winter. It can be worthy it if you’re willing to renovate etc
    Jul 31, 2021 1
    • Amazon
      Seaaadd

      Go to company page Amazon

      Seaaadd
      Personally, I only want one where I get to renovate. Otherwise, I get a house where the cost of renovating (and increase “value”) is built into sale price … but the work itself was shoddy, builder grade, and probably didn’t bother to fix the real issues.

      If the infrastructure is pretty solid but the house looks like sh*t, that is perfect. Assuming it is priced accordingly :-)
      Jul 31, 2021
  • OP
    There will be two kinds of distressed properties.

    The first ones that were defaulting regardless of Covid anyway, and the forbearance just delayed them. Some of those maybe recovered during Covid, but there will be an initial wave of repressed fire sales / foreclosures with the majority of them.
    They will probably show up as fixer uppers and properties that were not maintained well.

    The second ones were the ones impacted by Covid: rents not being paid, job loses, industry shifts. The forbearance and various stimulus packages saved the skin of a lot of those, but a significant fraction of it is still coming to market.
    Jul 30, 2021 2
  • Google
    xUxl46

    Go to company page Google

    xUxl46
    If by "fire sale" you mean selling in 3 days at 10% above asking, then yes.
    Jul 30, 2021 1
    • OP
      That’s only the supply side of the equation.

      The demand side of the equation is easier: just look at the amount of new home mortgage.
      It’s been going down recently, even though the interest rates are also going down.
      Jul 30, 2021
  • Verily
    TrulyTruly

    Go to company page Verily

    TrulyTruly
    Bruh like 30% of houses are rentals, like 10% of rentals owe back rent. Like say 30% (which is extremely high) of landlords with tenants that own backrent sell their house instead of just getting a new tenant. That's only 1% of houses being sold

    With the majority of those houses being concentrated in Georgia Alabama and Mississippi. I really don't see it affecting real estate outside those states. People that owe backrent are disproportionately low income and rent out cheap housing. So it's only going to affect one end of the market regardless
    Jul 30, 2021 0