A more accurate read to come on pandemic-induced financial stress
That trend could soon be changing as foreclosure moratoriums reach the July 31 expiration set by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA) and mortgage forbearance agreements also end in the coming months.
"The government’s foreclosure moratorium and mortgage forbearance program have created an unprecedented situation -- historically high numbers of seriously delinquent loans and historically low levels of foreclosure activity," said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company that provides an online marketplace for foreclosed and other distressed properties.
"With the moratorium scheduled to end on July 31, and half of the remaining borrowers in forbearance scheduled to exit that program over the next six months, we should start to get a more accurate read on the level of financial distress the pandemic has caused for homeowners across the country," Sharga said in the July 15 announcement about the mid-year foreclosure report.
Foreclosure increases found in only five of 220 metro areas
The effects of a recovering economy and mortgage forbearance agreements have been pretty much nationwide, with ATTOM Data Solutions finding year-over-year foreclosure increases in only five of the 220 metropolitan statistical areas (MSAs) of at least 200,000 residents: Tyler, Texas (up 88%); Brownsville, Texas (up 21%); Springfield, Illinois (up 19%); Sioux Falls, South Dakota (up 9%); and Lake Charles, Louisiana (up 5%).
ATTOM said that one in every 2,112 housing units -- or 0.05% -- had a foreclosure filing against it in the first six months of this year nationwide. By state, the highest rate was in Delaware at 0.10%, followed by Illinois at 0.09% and Florida, Ohio, and Indiana at 0.08% each.
Lake Havasu, Arizona, had the highest rate among MSAs at 0.25% of housing units with foreclosure filings, followed by Cleveland at 0.15%; Macon, Georgia, at 0.13%; Peoria, Illinois, at 0.12%; and Florence, South Carolina, at 0.12%.
The Millionacres bottom line
Further dimming the prospects of finding easy pickings for flipping or buying a good rental property on the cheap is the fact that rising prices, while making affordability an issue for many Americans, also has the effect of making short sales and foreclosures somewhat less likely.
"Fewer bank repossessions may be a trend we continue to see even after the government’s programs protecting borrowers from foreclosure expire," said RealtyTrac’s Sharga. "Rising home prices have provided most homeowners with enough equity to sell their homes at a profit, rather than lose them to a foreclosure or repossession."
Profitability for flippers has already become more challenging, but astute investors with an eye for bargains and the time and expertise to manage the process can still do well. (Here’s a Millionacres take on best practices to help do just that.)
I just saw that happen two doors down the street from me here in Columbia, South Carolina, where someone bought a nice but sort of worn and outdated place for $205,000 (it listed at $199,000), worked on it hammer and tongs for about three weeks, and just listed it for $300,000.
I hope they get it.