Predictions of a wave of foreclosures to follow the expiration of millions of forbearance agreements raise the possibility of a flood of homes coming onto a residential market choked by short supply.
But will that really happen? While surely delinquencies and foreclosures have been forestalled by deferrals and moratoriums, there also are widespread reports that many homeowners who are in forbearance are a) making their payments anyway or b) can but aren't since they don't have to and instead are holding on to their savings or using them elsewhere.
And if there is a surge of newly foreclosed properties, or homes put on the market by people avoiding that fate, would that make enough difference to affect housing supply and prices?
We asked three people who study such things for a living to share their takes on that topic. Here's what they said:
Lawrence Yun, Chief Economist, National Association of Realtors (NAR)
"Currently, there are virtually no foreclosures due to the government stimulus support, specifically on mortgage forbearances. Once the support ends even after further possible extensions, it becomes interesting.
"Will most jobs have come back by then and hence most homeowners be able to make mortgage payments? Are there sufficient buyers to quickly absorb new foreclosures since the mortgage rates are at record lows?
"These are some of the unknowns. My guess is that home prices will still hold on reasonably well due to the known facts: There has been great underproduction of homes over the recent years, and we don't have funny subprime mortgages that have overstretched consumer budget."
-- Lawrence Yun, Ph.D., NAR
Robert Dietz, Chief Economist, National Association of Home Builders (NAHB)
"While we expect a pickup in foreclosure activity due to long-term unemployment, this increase in properties will mean more turnover of homes without an actual increase in the housing stock. A true increase in supply can only come from increased housing construction.
"Keep in mind that housing enters this downturn underbuilt, not overbuilt. We have a housing deficit of approximately 1 million homes due to years of underbuilding and growing population.
"The pickup in foreclosure activity will be due to elevated unemployment. We estimate that the peak rate of unemployment will be 16 or 17% (after future revisions) in the spring, but it will likely remain near 10% at the end of the year. Nonetheless, we expect home prices not to post a significant decline this recession due to lean overall inventories."
-- Robert Dietz, Ph.D., NAHB