By Mike Bodeen · 30 August 2021
How Will They Affect Our Market?
The national ban on foreclosures is at an end for most homeowners. Lenders can now proceed to file, but will that result in an immediate pickup in new inventory for buyers in the Phoenix Metro area of which tens of thousands are currently in default? Probably not so much, and for a number of reasons.
First, the lifting of the ban does not affect homeowners who are current in their forbearance agreements with their lender. However, over the next 6 months to a year, those will expire as well, and foreclosure proceedings can commence if those property owners fall behind on their payments. Hopefully, those in forbearance have had their economic situation change for the better recently, and they can right the ship.
A big reason why Phoenix Metro may not see so many foreclosures is because of the equity that these homes carry. During the great recession, so many foreclosures occurred because there was no equity in the homes, so many sellers walked away and left it for the mortgage lender to take back. Usually, in times of distress, investors swoop in and pick up the distressed property.
In March 2010 (see chart below) we had over 5000 foreclosures – in just that one month alone. In comparison, last month (July) we had a total of 13! And if most everyone has sufficient equity so that if they sell, they will cover the indebtedness and perhaps pull cash out of the home.
The solving of one problem however creates a new one. Yes, those behind on their mortgages can probably sell and avoid foreclosure, but then what? Because of their impaired credit they may not be able to buy another home right away, which means they will have to rent, or move in with friends or family, neither of which is an enticing selection. This can make an already tight rental market worse than before for renters.
What can be done? The best choice I think is to do whatever it takes to stay in the home. Bring payments up to date however you can. Beg. Borrow. Deal. (that last one wasn’t the first word I thought of, however)
Perhaps you’re thinking of selling and moving to another locale, in state or otherwise? Before you do, do your homework. MANY communities in and outside of Arizona, are experiencing the same rental frustrations.
Overall, there might be a slow rising of additional homes coming on the housing market, but in our opinion, not so much that will make a noticeable difference, at least right away.