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Foreclosures are on the rise. Here’s what that says about the housing market

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Foreclosures are on the rise. Here’s what that says about the housing market​

Updated: March 19, 2022 at 7:15 a.m. ET
By

Alisa Wolfson​

In January there was a seven-fold increase in foreclosure starts, new data shows.​




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The foreclosure uptick indicates that the economic — and especially employment recovery — is not complete, an expert says.​

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In January there was a seven-fold increase in foreclosure starts as compared to December, with roughly 33,000 loans referred to foreclosure, according to a report from mortgage data and analytics company Black Knight. What’s more, data from real estate data analytics firm ATTOM Data Solutions revealed that lenders repossessed 2,634 U.S. properties through completed foreclosures in February 2022, which is an increase of 70% from last year (though it’s still down 45% from last month).

What do these foreclosures say about the housing market?

Realtor.com senior economist George Ratiu says the uptick in foreclosures during January is an early signal that many of the regulatory protections implemented during the pandemic to help Amercans stay in their homes are starting to wear off. Indeed, millions of people got mortgage forbearances during the pandemic that put their mortgage payments on hold. Most of them got back on their feet and ended their forbearances in 2020 and 2021, pros say.
The people who remained in forbearances into 2022 might be more likely to be suffering permanent financial hardships. “When their forbearances end, they’re less likely to be able to resume their payments and more likely to end up in foreclosure,” says Holden Lewis, home and mortgage expert at NerdWallet. What’s more, for many, the forbearance period is scheduled to come to a close soon and there is a backlog of loans who are either in loss mitigation or past due even after coming out of mitigation which may still enter foreclosure in the months ahead,” says Ratiu.
The foreclosure uptick “also indicates that the economic, and especially employment recovery, is not complete. We lost 20.2 million jobs in April 2020 alone as the government imposed wide-ranging lockdowns and since then, the economy has added 18.8 million jobs back, but we’re still short of the pre-pandemic level,” says Ratiu.
That said, “the silver lining for housing markets and homeowners is that January’s foreclosure rate remains 40% below the value registered before the pandemic,” says Ratiu. In fact, pros say, the housing market is still going strong, thanks in part to mortgage interest rates that are still near record lows (though they have ticked up recently). “With demand for homes exceeding supply by so much, no one is going to get a foreclosure for a steal. Competing buyers are bidding up prices for all homes, including foreclosures,” says Lewis.

Should I buy a foreclosure?

While no one wants to gain from another’s misfortune, you may come across foreclosed properties in your search for a home. Here’s what you need to know about potentially buying one.
First, it’s important to understand the different types of foreclosures listed for sale. Depending on the stage of the delinquency process, you may find pre-foreclosures where a lender notifies the homeowner that they’re in default; short-sales where a homeowner tries to sell the home for less than the mortgage value due to financial distress; sheriff’s sale auction where properties in default are sold at courthouses; bank foreclosures known as real estate owned (REO) properties; and government foreclosures where properties are purchased with loans from the Federal Housing Finance Agency or Veterans Administration.
Properties in foreclosure can be found on the multiple listing service (MLS), among other spots. They “are also listed in newspapers, bank offices and websites. For buyers considering a foreclosed property, auctions are another venue to find available houses,” says Ratiu.

But, in today’s market, where a shortage of homes for sale keeps prices elevated, buyers may not necessarily find a steal when looking at foreclosed properties. “Banks who own REO homes have an incentive to sell them quickly, but they are aware of market prices and also vested in recouping the value from the home. For buyers considering a foreclosed property, it’s important to get through an inspection to determine the physical condition of the home. Obtain an estimate for the cost of repairs, which should also determine the offer price they may want to make,” says Ratiu. Adds Lawrence Yun, chief economist at the National Association of Realtors: “Many real estate investors are looking for a deep foreclosure bargain, but it’s still a seller’s market.”

 

Usury

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Yeah going from 0.01% to 0.07% of outstanding mortgages is not statistically significant.
 

TAEZZAR

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I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege ! :Grrr::Grrr::Grrr::Grrr::Grrr::Grrr:
 

Usury

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There were moratoriums on both and now both are expired
 

edsl48

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I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege ! :Grrr::Grrr::Grrr::Grrr::Grrr::Grrr:
Here in Taxinois bankers as well as landlords are stuck with them equally. Illinois is full of deadbeats and deadbeats vote...that's how it is here
 

TAEZZAR

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Here in Taxinois bankers as well as landlords are stuck with them equally. Illinois is full of deadbeats and deadbeats vote...that's how it is here
Here in pervert run Orygun, the banksters have deep influence with the pervert in charge.
The proper way to handle this is to get a class action lawsuit against the county/state using the RICO Act. They forbid you to collect rent, which reduces your property value to zero. Therefore they should not be able to tax the property.
Ya, I know, wishful thinking! The .gov is your worst enemy ! :Grrr::Grrr::Grrr::Grrr::Grrr:
 

southfork

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Well im a vet and this time im getting in on the action. Getting me that 100 acre + farm ive always wanted, gona make one payment and .gov should let me live there free for a few years
 

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...George Ratiu says the uptick in foreclosures during January is an early signal that many of the regulatory protections implemented during the pandemic to help Amercans stay in their homes are starting to wear off...
Sounds like that would be the main reason for the uptick now.

...While no one wants to gain from another’s misfortune...
Huh? Why not? And how would one gain from another's fortune? Maybe I'm just a bad person.
 

solarion

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It seems likely the foreclosures are just getting started, what with inflation just recently being acknowledged as a long term embedded trend...ya know the opposite of "transitory". People silly enough to have ARMs are going to get killed, and if/when the fed starts dumping mortgage backed securities off its balance sheet to steepen the yield curve. It's also not a stretch to suspect that a time may come in the not too distant future when it gets ugly even for those with low fixed rate mortgages when they try to re-fi after they're put underwater due to slowing demand causing prices to crash.
 

edsl48

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I have noticed over at Lowes or HomeDepot people buying items like a water heater or dishwasher go on payments. It seems strange to me that someone doesn't have at least enough liquidity to buy a water heater but anyway. I assume these people are right at the edge and should something else happen to where they can no longer rely on high interest payment plans the next step is heading to possible foreclosure.
Last go around I saw multi flips that were only halfway completed because the flipper simply ran out of money ( or credit).
We could be nearing that stage again because in my area there are plenty of flippers out there buying sight unseen and at the top price. Over my many years housing has always cycled despite what the local realtor tell you and why would this time be any different?
 

EO 11110

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Casey Jones

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I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege ! :Grrr::Grrr::Grrr::Grrr::Grrr::Grrr:
It comes down to the nature of each.

Borrowers, mortgage holders, tend to have resources; some assets; have proven themselves creditworthy. They tend to be middle-class; and statistically, Euro-American/Caucasian/etc. That last matters in that there's nothing but hate from the Elite Classes, now, for such vermin.

So stripping them of their property, in a sheriff's sale or bank foreclosure, is just fine.

In justification, TPTB say - correctly - that these are the consequences of default, of non-payment of the loan. But OTHER debts are not treated equally - and because of the class/race/color of other debtors. Such as non-paying tenants.

We haven't - yet - gotten to where race or class explicitly is a factor in whether a debt can be collected, a tenant evicted, a home foreclosed. But they're playing a game of statistics. Tenants tend to be of lower socioeconomic strata than borrowers. Even if, numerically, most tenants are Euro-Americans, a much higher number of minorities are tenants. So...the whole class gets the de-facto debt forebearance.
 

Fiat Metaler

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If you look at a 40 year chart, you barely notice the recent bump up in rates. That chart is down and to the right.

The increase in rates the past 18 months has probably increased new buyers' monthy payment about 15%, while the increase in real estate prices has increased 20+%. Its not nothing but its not the end of the world either. The reality is that rents are going to increase 20% eventually and then those houses are going to look cheap. The shortage of houses, especially at the modest end of the market, has not been addressed.
 

nickndfl

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I have noticed over at Lowes or HomeDepot people buying items like a water heater or dishwasher go on payments. It seems strange to me that someone doesn't have at least enough liquidity to buy a water heater but anyway. I assume these people are right at the edge and should something else happen to where they can no longer rely on high interest payment plans the next step is heading to possible foreclosure.
Last go around I saw multi flips that were only halfway completed because the flipper simply ran out of money ( or credit).
We could be nearing that stage again because in my area there are plenty of flippers out there buying sight unseen and at the top price. Over my many years housing has always cycled despite what the local realtor tell you and why would this time be any different?
A full tank of gas in a motor home or yacht is now the equivalent of a mortgage payment from 5 years ago.
 

EO 11110

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If you look at a 40 year chart, you barely notice the recent bump up in rates. That chart is down and to the right.

The increase in rates the past 18 months has probably increased new buyers' monthy payment about 15%, while the increase in real estate prices has increased 20+%. Its not nothing but its not the end of the world either. The reality is that rents are going to increase 20% eventually and then those houses are going to look cheap. The shortage of houses, especially at the modest end of the market, has not been addressed.

you cited reasons why prices will come down. normies buy on how much their payment is, relative to their income.

interest rate is pushing payments higher. will need price to come down so normie can still buy same house at same payment.

not unlikely the coming recession is going to accelerate the price declines. frbny will then start cutting rates and buying mbs to stop the bleeding

i'm about to list two lots for sale. plan is to redeploy that money back into real e during the correction/recession. hope i'm not too late
 

specsaregood

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I have noticed over at Lowes or HomeDepot people buying items like a water heater or dishwasher go on payments. It seems strange to me that someone doesn't have at least enough liquidity to buy a water heater but anyway. I assume these people are right at the edge and should something else happen to where they can no longer rely on high interest payment plans the next step is heading to possible foreclosure.
Last go around I saw multi flips that were only halfway completed because the flipper simply ran out of money ( or credit).
We could be nearing that stage again because in my area there are plenty of flippers out there buying sight unseen and at the top price. Over my many years housing has always cycled despite what the local realtor tell you and why would this time be any different?
Because a lot of those places have promotion plans so you can get the item interest free for up to 24months? HD sends me spam cards in the mail with that promotion every month.

If the inflation rate is 6%+ currently and you get it interest free for 2 years, why not go for the payment plan if you might have other uses for the money during that 2 years or dont mind debt?
 
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the_shootist

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Because a lot of those places have promotion plans so you can get the item interest free for up to 24months? HD sends me spam cards in the mail with that promotion every month.

If the inflation rate is 6%+ currently and you get it interest free for 2 years, why not go for the payment plan if you might have other uses for the month during that 2 years or dont mind debt?
Personally, I wouldn't because I abhor debt. I do realize other people feel differently about it. I don't finance anything I can or can't afford. I'm crazy like that :2 thumbs up:

my .02
 

specsaregood

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Personally, I wouldn't because I abhor debt. I do realize other people feel differently about it. I don't finance anything I can or can't afford. I'm crazy like that :2 thumbs up:

my .02

I am as well and almost always go for the discount instead. BUT, being self-employed my income has ups and downs and there are times when I have chosen the interest-free payment plan instead just to keep reserve funds available in case invoices don't get paid in a timely manner.
 
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Silvergun

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I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege ! :Grrr::Grrr::Grrr::Grrr::Grrr::Grrr:

Simple, because the best way to destroy America is to attack the middle class
 

the_shootist

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Simple, because the best way to destroy America is to attack the middle class
The chin flu lockouts did severe damage to the middle class and to small business. Much more damage than most of us would think!!

The middle class will keep taking it on the chin until the people fight back. No amount of voting or petitions or investigations or any of the sort will be effective.

There's only one way....and it seems to be taking longer than it should be for the people to figure out

waiting for Q.gif


hanging never too important.jpg
 

TAEZZAR

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Watch for the Amazon/Chase scam. Amazon charged me for some useless music app that I did NOT order.
I called them to remove the $9.99 charge from my account. The did - A WEEK LATER- but it was NOT recorded until AFTER we paid our card balance (we always pay 100% of our CC charges) because we took the credit when we payed the bill, we were charged $34 INTEREST. This happened TWO months in a row !!!
Are Amazon & the banksters this desperate for $$$$$ ?
 

the_shootist

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Watch for the Amazon/Chase scam. Amazon charged me for some useless music app that I did NOT order.
I called them to remove the $9.99 charge from my account. The did - A WEEK LATER- but it was NOT recorded until AFTER we paid our card balance (we always pay 100% of our CC charges) because we took the credit when we payed the bill, we were charged $34 INTEREST. This happened TWO months in a row !!!
Are Amazon & the banksters this desperate for $$$$$ ?
Hey Teazz, one of the great things I like about my credit union is they've always been ahead of the technical curve. For example, I get a text message for every activity on both my credit and debit card. That's been in place for me for years. I've caught several attempts of unauthorized charges over the past few years, nipped them each in the bud because of that service, which saved myself any grief associated with those scams.

You might want to check and see if your institution offers that service. It's free (for me anyway) and it's a must have these days IMHO :summer:
 

TAEZZAR

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Hey Teazz, one of the great things I like about my credit union is they've always been ahead of the technical curve. For example, I get a text message for every activity on both my credit and debit card. That's been in place for me for years. I've caught several attempts of unauthorized charges over the past few years, nipped them each in the bud because of that service, which saved myself any grief associated with those scams.

You might want to check and see if your institution offers that service. It's free (for me anyway) and it's a must have these days IMHO :summer:
We are in the process of getting rid of banksters & have joined a highly recommended Credit Union.
I will speak with them when we sign-up for their CC. Thanks
 

edsl48

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Because a lot of those places have promotion plans so you can get the item interest free for up to 24months? HD sends me spam cards in the mail with that promotion every month.

If the inflation rate is 6%+ currently and you get it interest free for 2 years, why not go for the payment plan if you might have other uses for the money during that 2 years or dont mind debt?
Personally I understand your point but from my observations it is a lot of people living close to the edge. I might add to this Home Depot charges, should you miss that payment, interest back to the original purchase date so if you are one day late...blammo!
I should add to another thing I see over there these days as people are using one credit card to make the payment on the other credit card. People are close to the edge yet I see the restaurants are packed again, $80,000+ trucks are showing up and there are lines at the high price gas stations.
 

the_shootist

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Personally I understand your point but from my observations it is a lot of people living close to the edge. I might add to this Home Depot charges, should you miss that payment, interest back to the original purchase date so if you are one day late...blammo!
I should add to another thing I see over there these days as people are using one credit card to make the payment on the other credit card. People are close to the edge yet I see the restaurants are packed again, $80,000+ trucks are showing up and there are lines at the high price gas stations.
I tend to agree with this. Americans are used to living beyond their means. The central bankers and the Fed have been hard at work getting them accustomed to it since 1913.

For so many Americans, being overextended is going to be a hard (and painful) habit to break!
 

TAEZZAR

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I tend to agree with this. Americans are used to living beyond their means. The central bankers and the Fed have been hard at work getting them accustomed to it since 1913.

For so many Americans, being overextended is going to be a hard (and painful) habit to break!
I have what I have BECAUSE I did not comply.
Live within your means, pay off CC's every month. You will have more money to buy PM's :gold: :finished:
The banksters are not your friend.
 

edsl48

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Yes and that can lead to foreclosure when the payments overwhelm the home buyer. I saw the one card paying off the other card a lot back in the day and often done by house flippers as house sales and values were falling. The ones that were not flippers I will assume maxed out their home equity in one of those "home equity line of credit" (heloc) and thus were in the card delema. I still remember the ads something like "you made a wise investment and isn't it time to reward yourself by harvesting your equity with a heloc." Around here the public jumped right in with new trucks, vacations, new expensive kitchen rehabs and so on. Offering that heloc money to those homebuyers was like holding up a piece of candy in front of a baby and those loans were often variable rate destroying some of the insurance /security value of a fixed mortgage. I have pondered if it wasn't for the lockdowns things may have rolled over by now but with people unable to go to the restaurants, high priced sporting events, vacations and home rehabs they were given a bit of a recess. Today were are back in business here and all I see is the same old cycle I have seen for decades...just sayin what some old man has seen over the years
 

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Yes and that can lead to foreclosure when the payments overwhelm the home buyer. I saw the one card paying off the other card a lot back in the day and often done by house flippers as house sales and values were falling. The ones that were not flippers I will assume maxed out their home equity in one of those "home equity line of credit" (heloc) and thus were in the card delema. I still remember the ads something like "you made a wise investment and isn't it time to reward yourself by harvesting your equity with a heloc." Around here the public jumped right in with new trucks, vacations, new expensive kitchen rehabs and so on. Offering that heloc money to those homebuyers was like holding up a piece of candy in front of a baby and those loans were often variable rate destroying some of the insurance /security value of a fixed mortgage. I have pondered if it wasn't for the lockdowns things may have rolled over by now but with people unable to go to the restaurants, high priced sporting events, vacations and home rehabs they were given a bit of a recess. Today were are back in business here and all I see is the same old cycle I have seen for decades...just sayin what some old man has seen over the years
My last house pmt was in 1994. I had bought that house in 1981 for $159K. It sold last year for 1.8 MILLION. Something is REALLY WRONG !!!

bidet dollar.png
 

hoarder

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What foreclosures?? Why would someone let their home go back when they have 200K equity on the house they bought for practically nothing down last year? At least that's how it is at White flight destinations.
 

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you cited reasons why prices will come down. normies buy on how much their payment is, relative to their income.

interest rate is pushing payments higher. will need price to come down so normie can still buy same house at same payment.

Inflation in housing prices will cause rents to rise, although there may be a 12-24 month lag. So renters who can buy still will despite higher prices and higher rates because rents will be even higher. Like you say, they will look at their monthly payment and say its cheaper to buy.

housing%20affordability%201.jpg


The mainstream view is that rising interest rates will cause housing prices to fall or foreclosures. I dispute that because the impact of the rate increase so far has been less than the impact of rising housing prices on the monthly payment. Also, once you own a home wiht a fixed rate mortghage, your payment doesn't change much so rising rates don't really cause foreclosures; instead its job loss.

So the bottom line is that limited supply and rising rents will force home prices even higher, eventually, although they may pause for a while.

There is also a lot of question about how high the Fed can allow rates to go.
 
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solarion

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What foreclosures?? Why would someone let their home go back when they have 200K equity on the house they bought for practically nothing down last year? At least that's how it is at White flight destinations.
If they got it last year with practically nothing down, then how would they have 200k in equity? Those 12 monthly payments would be nearly all interest payments. As to why they'd walk away, well that would require rising expenses and/or falling wages rendering them unable to keep up with the payments...and/or money problems leading to marital disharmony followed by divorce. If/when housing prices fall sharply they'll also be underwater and unable to refinance later...even at higher rates.

There is also a lot of question about how high the Fed can allow rates to go.
Quite high I should think...at least on the long end of the curve. 30yr fixed is pushing 4.9% currently, so figure real pain gets rolling if/when we see 5.25% and higher. Two points higher in a few months would be pretty brutal. Amusing how 20 yr mortgage rates are nearly identical to 30yr rates currently. The only friendly place on the yield curve is right where treasury keeps rolling over trillions in toxic debt.
 

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If they got it last year with practically nothing down, then how would they have 200k in equity? Those 12 monthly payments would be nearly all interest payments. As to why they'd walk away, well that would require rising expenses and/or falling wages rendering them unable to keep up with the payments...and/or money problems leading to marital disharmony followed by divorce. If/when housing prices fall sharply they'll also be underwater and unable to refinance later...even at higher rates.
Inflation and White flight. Homes are up 100% over last year in some areas, like Whitefish and Kalispell. Residential lots and small tracts are up 500% from what they were 3 years ago.
 

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As the latest existing home sales report cautioned, with NAR chief economist Larry Yun warning that "housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases," BofA joins the chorus warning that last year's housing euphoria is unlikely to repeat and this year will be a much more challenging year for the housing market given significant headwinds to affordability and ongoing supply-side challenges.

The pickup in mortgage rates this year has been fast and furious, with the 30yr fixed mortgage rate averaging 4.5% according to Bankrate. This is the highest since 2018 and up more than nearly 100bp from the December average of 3.26%.

Booming home price appreciation last year contributed to diminishing affordability, with the NAR index down 14.7% yoy in December—the latest data point.

The massive rates move this year suggests that the affordability index will see another significant move lower. Paradoxically, further strong home price gains will add to the affordability pullback — BofA currently expects 10% appreciation in Case-Shiller home prices this year, largely due to a continuation of the historical supply demand imbalance.

Housing affordability therefore tends to lead the trajectory for existing home sales, by roughly half a year. According to BofA, the rates shock suggests affordability will be down more than 25% yoy by March - a record decline - with additional downside from higher home prices! If demand follows a similar trajectory, existing home sales could fall below 5mn saar by 2H 2022.

BofA expects overall existing home sales of 5.6mn, pulling back -10% to 2020 levels.

The costs and financial hurdles to buying a home are not the only thing that have been on a tear recently. Rents have been on fire over the past year, with the Zillow Observed Rent index soaring 14.9% yoy to $1,904 in January.

Given housing costs are rising broadly, the question many households face is which is less painful: to buy or to rent? Using Zillow Home Value and Observed Rent Indexes, the home price/rent ratio has worsened dramatically since the pandemic, jumping to 171. And since the hurdle from home prices and affording the down payment is the worst on record, tilting the equation towards renting.

Calculating the implied mortgage based on Zillow home prices and current mortgage rates, BofA finds that the mortgage payment/rent ratio has also been on the rise and is nearly back towards the high of the prior business cycle. That said, the ratio is less than one, suggesting it is still better to buy than rent. This ratio does not account for property taxes or other expenses tied to homeownership, however. When those are included, it's a toss up whether one should rent or buy...

While demand is about to fall off a cliff, especially in a recession/stagflation, a quick look at the supply side also shows an ugly picture: one of the biggest challenges in the housing market has been dwindling supply, which has reached new record lows. Focusing on single-family to see a long history, months supply of new and existing homes dropped to 2.3 in January, down from the 2.6 average in 2021 and nearly half of the 4.1 average in 2019 before the pandemic (see chart below). Strong demand has been part of the equation for lower months supply, with new and existing single family home sales soaring. However, actual inventory levels have also reached historical lows: 1.27mn SA this past January, which is down from 1.33mn last year and 1.86mn in 2019.
 

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As the latest existing home sales report cautioned, with NAR chief economist Larry Yun warning that "housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases," BofA joins the chorus warning that last year's housing euphoria is unlikely to repeat and this year will be a much more challenging year for the housing market given significant headwinds to affordability and ongoing supply-side challenges.

The pickup in mortgage rates this year has been fast and furious, with the 30yr fixed mortgage rate averaging 4.5% according to Bankrate. This is the highest since 2018 and up more than nearly 100bp from the December average of 3.26%.

Booming home price appreciation last year contributed to diminishing affordability, with the NAR index down 14.7% yoy in December—the latest data point.

The massive rates move this year suggests that the affordability index will see another significant move lower. Paradoxically, further strong home price gains will add to the affordability pullback — BofA currently expects 10% appreciation in Case-Shiller home prices this year, largely due to a continuation of the historical supply demand imbalance.

Housing affordability therefore tends to lead the trajectory for existing home sales, by roughly half a year. According to BofA, the rates shock suggests affordability will be down more than 25% yoy by March - a record decline - with additional downside from higher home prices! If demand follows a similar trajectory, existing home sales could fall below 5mn saar by 2H 2022.

BofA expects overall existing home sales of 5.6mn, pulling back -10% to 2020 levels.

The costs and financial hurdles to buying a home are not the only thing that have been on a tear recently. Rents have been on fire over the past year, with the Zillow Observed Rent index soaring 14.9% yoy to $1,904 in January.

Given housing costs are rising broadly, the question many households face is which is less painful: to buy or to rent? Using Zillow Home Value and Observed Rent Indexes, the home price/rent ratio has worsened dramatically since the pandemic, jumping to 171. And since the hurdle from home prices and affording the down payment is the worst on record, tilting the equation towards renting.

Calculating the implied mortgage based on Zillow home prices and current mortgage rates, BofA finds that the mortgage payment/rent ratio has also been on the rise and is nearly back towards the high of the prior business cycle. That said, the ratio is less than one, suggesting it is still better to buy than rent. This ratio does not account for property taxes or other expenses tied to homeownership, however. When those are included, it's a toss up whether one should rent or buy...

While demand is about to fall off a cliff, especially in a recession/stagflation, a quick look at the supply side also shows an ugly picture: one of the biggest challenges in the housing market has been dwindling supply, which has reached new record lows. Focusing on single-family to see a long history, months supply of new and existing homes dropped to 2.3 in January, down from the 2.6 average in 2021 and nearly half of the 4.1 average in 2019 before the pandemic (see chart below). Strong demand has been part of the equation for lower months supply, with new and existing single family home sales soaring. However, actual inventory levels have also reached historical lows: 1.27mn SA this past January, which is down from 1.33mn last year and 1.86mn in 2019.
All part of the master plan to destroy the country by destroying the middle class. We know what's killing us, we simply don't know how to stop it
 

EO 11110

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Inflation in housing prices will cause rents to rise, although there may be a 12-24 month lag. So renters who can buy still will despite higher prices and higher rates because rents will be even higher. Like you say, they will look at their monthly payment and say its cheaper to buy.

housing%20affordability%201.jpg


The mainstream view is that rising interest rates will cause housing prices to fall or foreclosures. I dispute that because the impact of the rate increase so far has been less than the impact of rising housing prices on the monthly payment. Also, once you own a home wiht a fixed rate mortghage, your payment doesn't change much so rising rates don't really cause foreclosures; instead its job loss.

So the bottom line is that limited supply and rising rents will force home prices even higher, eventually, although they may pause for a while.

There is also a lot of question about how high the Fed can allow rates to go.

we at gim2 know how to stop it. END THE FED. it is the wellspring of the communist coup. all of it
 

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The supply squeeze is engineered as is the rapid rate rise on the long end of the yield curve. These banking creatures fuck around with people's lives and livelihoods...like they're play things put on Earth solely for their amusement. By screwing with every free market ever and dumping helicopter loads of cash they made this rise in housing prices inevitable, and now they're intentionally smashing it.

The whole thing would've been much better left TF alone...but they despise free markets.
 

the_shootist

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The supply squeeze is engineered as is the rapid rate rise on the long end of the yield curve. These banking creatures fuck around with people's lives and livelihoods...like they're play things put on Earth solely for their amusement. By screwing with every free market ever and dumping helicopter loads of cash they made this rise in housing prices inevitable, and now they're intentionally smashing it.

The whole thing would've been much better left TF alone...but they despise free markets.
The people have the power to stop it, what they don't have is the will and the courage to do what's needed because they'd be giving up their cushy creature comforts ....nope, they're not ready yet