Mortgage Forbearance Housing Market Crash Myth EXPOSED

Mortgage Forbearance Housing Market Crash Myth EXPOSED

in may of this year a little under 5 million homes were in forbearance as of october of this year we're down to 1.3 million homes in forbearance however some are still proclaiming that there's going to be a housing market crash due to these last 1.3 million homes but the truth is there's no real data to support the claims of these folks who have been proclaiming gloom and doom for the housing market of those who've exited forbearance 16.5 percent left forbearance not cut up on their mortgage and without a payment plan in place to make up for their missed payments yet with their bank 7.2 percent of those leaving forbearance so far have either had to refinance their house to pay off what they missed in payments or they've had to sell their house and 1.4 of those exiting forbearance have left forbearance with a deed in lieu of foreclosure a short sale or other miscellaneous exits those three groups represent about 25 percent of those who have exited forbearance so far and are the group most at risk of having to sell their home or get foreclosed upon when they leave forbearance the vast majority of those leaving forbearance about 75 percent either left forbearance completely caught up on their payments or with a payment plan in place with their bank to make up for missed payments now this is where current proponents of a forbearance crash will add that we are at the very end of forbearance those last 1.3 million people are the very last people in forbearance and therefore they must be the ones who need it the most and accordingly those at risk in this group of having to either sell their house or get foreclosed upon will definitely be higher than that 25 number that i just gave you sure let's say for this last 1.3 million the number of people the percentage of people at risk of either having to sell their home or get foreclosed upon is doubled from 25 all the way to 50 and not only is that number doubled but every single person who is at risk actually ends up selling their house or going into foreclosure let's also say for argument's sake that that whole 50 of people who are currently in forbearance all get foreclosed upon or decide to sell at the same time this is not going to happen the remaining people in forbearance those 1.3 million people are going to trickle out of forbearance throughout the rest of 2021 and going into 2022.

But for argument's sake if 50 of everybody in forbearance now immediately put their homes on the market through sale and foreclosure that would be 650 000 listings that would instantly hit the market surely this is the large tsunami of listings that many have been prophesying about over the past year as of september 2021 the last month of data put out by the national association of realtors across the u.s there are 646 000 active listings in september of 2019 before covet when the market was doing good but not great there were 1.36 million active listings in september of 2019. so if we took that 646 000 active listings that we have on the market right now and instantly added to it that 50 percent of people that are still in forbearance that would only make just shy of 1.3 million active listings which is still less than the 1.36 million listings that we had only two years ago add to that buyer demand right now which is much higher than it was in 2019.

cares act mortgage forbearance

As of september there were 664 000 listings under contract in the us compare that to just 476 000 listings in september of 2019. homes are certainly selling at a much quicker pace right now than they were in 2019. although i'm sure it would be a complete shock to the system if 50 of all the listings that were under forbearance right now immediately hit the market i'm not sure that it would be the impending chaos and crash that many want you to think it is the biggest threat to our housing market right now is that home prices continue to grow at an unsustainable pace like they have over the past year a surge of homes that stagnated growth or even made home prices go slightly negative for a little bit wouldn't be a bad thing for the housing market it would actually be healthy logan motoshami who's a chief economist over at housing wire actually stated that housing inventory between 1.52 million and 1.93 million would actually be very healthy for our housing market and bring much needed balance so is this 2008 all over again not even close those exiting forbearance and selling or going into foreclosure could impact the housing market but overall that impact is going to be spread out over time going into 2022 and it's not likely to be close to that 50 number that we were talking about of those who are exiting forbearance actually selling or going into foreclosure right now job openings are extremely high for those who are looking to work so they don't lose their homes take a look at this fred graph of the number of non-farm job openings over the last 20 years as you can see right now we are at an almost all-time high for non-farm job openings and additionally many at risk have the opportunity of a cash-out refinance to get called up on their mortgage according to cnbc 98 of those who are in forbearance have at least 10 percent equity in their home some of you who are watching may be asking about the homes that have already left forbearance and may already be in the foreclosure pipeline but we have not seen them hit the market yet as foreclosures according to adam a company that gathers data on foreclosures the average time to get foreclosed upon right now in the us is 922 days so it is possible of the forbearance exits that we've already had that some of those are in the foreclosure pipeline we just haven't seen them hit or impact the housing market yet however there were only twenty five thousand two hundred and nine foreclosure starts and quarter three in the u.s housing market this year according to adam that's a little over 8 000 foreclosure starts per month those monthly foreclosure starts would be equivalent to approximately 1.25 of the inventory that we currently have on the market not enough to cause problems and actually only a fraction of the number of foreclosure starts that we had pre-covered so it would seem that the pressure for a forbearance crash is on these last 1.3 million homes that are still currently in forbearance as always doom and gloom is not as imminent as many would like you to think sure forbearance exits may or will even affect the housing market but it appears that the most likely scenario is that it only helps to cool the housing market possibly even in a positive way to keep the market from overheating like we've seen over the past year what are your thoughts on the current situation with forbearance i'd love to hear from you in the comments below those of you who've been supporting this channel and commenting positively on my videos you mean more to me than you know i hope you guys enjoyed this video i hope you found it helpful and as always i'll see you in the next one

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