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Foreclosures rising [But not like 2008]

Foreclosures rising [But not like 2008]
by Brad Cartier, posted in Newsletter

ATTOM Data Solutions released its quarterly foreclosure report, finding that properties with foreclosure filings (default notices, scheduled auctions or bank repossessions) increased 34% quarter-over-quarter, and 68% year-over-year. If you look at the monthly data, September saw foreclosure filings increase 102% year-over-year, as eviction and foreclosure moratoriums expired. Of note, the highest foreclosure rates were in Nevada, Illinois and Delaware.

In commenting on the data, Rick Sharga, executive vice president at RealtyTrac, noted: 

“Despite the increased level of foreclosure activity in September, we’re still far below historically normal numbers…September foreclosure actions were almost 70 percent lower than they were prior to the COVID-19 pandemic in September of 2019, and Q3 foreclosure activity was 60 percent lower than the same quarter that year. Even with similar increases in foreclosures over the next few months, we’ll end the year significantly below what we’d see in a normal housing market.”

Indeed, looking at historical findings, we are still well below historical averages.

US foreclosures by quarter historical - ATTOM

Source: ATTOM Data Solutions

In commenting on this data, Diana Olick of CNBC notes that foreclosure rates should stay relatively low due to lenders working more with borrowers and historically high levels of home equity which can act as a cushion for homeowners.

Sharon Lurye of elaborates on that final point above, reporting that “not everyone who has a foreclosure filing (defined as a default notice, scheduled auction, or bank repossession) is going to lose their homes in an ugly or financially devastating way. With home prices at record highs, homeowners are more likely to be able to sell their home if they can no longer keep up with payments—sometimes for a profit, which can help to cushion the blow.”

Finally, further ATTOM Data Solutions reporting reveals foreclosure rates on a Zip Code basis, highlighting that Cleveland, Ohio (44112) and Crete, IL (60417) had the highest rates nationally. 

Top US Zip Codes for foreclosure filings - ATTOM

Source: ATTOM Data Solutions

Tracking the rental market

Dwellsy, a rental listing platform, released data earlier this month on the discrepancy between apartment and single-family home rental rates. The general rise in rental prices is not equal across the market, with apartment rents actually decreasing 2.3% since January 2021. Whereas single-family rents are up 15% in the same time period, driving overall median rents up 9.6%.

Jonas Bordo, CEO & Co-Founder of Dwellsy, had this to say about the data: 

“Due to COVID19, renters want more space and control over access to their homes, and this has led to substantial new demand for single family rentals. The supply of these properties is relatively unchanged–maybe even down, due to the hot single-family sales market–so rent for this asset type has gone through the roof in 2021.” 

Tim Ellis of Redfin reported last week on rental and mortgage payment data, noting that “Average monthly rents increased 11% nationwide over the past year, the highest growth rate in at least 2 years. The national median monthly mortgage payment for homebuyers went up even faster, climbing 15% since September 2020.”

Both rents and mortgages are rising - Redfin

Source: Redfin

Joe Dyton of Connected Real Estate Magazine reported last week that vacancy rates are at historical lows, sitting at 2.7% nationally. Meanwhile, we’ve seen record demand for rental housing alongside record low move-outs. Jay Parsons, the deputy chief economist at RealPage, explains:

“More new renters than ever are knocking on the front door, but fewer existing renters than ever are leaving out the back door…This is an unprecedented phenomenon that translates to a severe shortage in rental housing availability at every price point and in essentially every city across the country. This is no longer just about supply shortages for low-income households. There’s more demand than supply even at the upper-income levels.”

Crypto mortgages

In cryptocurrency news this week, CNBC reported that United Wholesale Mortgage—the second-largest U.S. lender—is dropping plans to allow mortgage payments in cryptocurrency following a pilot project that began in August 2021. UWM CEO Mat Ishbia said that costs and regulatory uncertainty led the company to halt the pilot program. UWM piloted accepting mortgage payments with bitcoin, ether, and dogecoin, but found that although consumers liked the idea, demand just wasn’t there.

Breana Noble of The Detroit News comments on the news, noting that “The Pontiac-based mortgage giant in September accepted its first cryptocurrency payment, which it says is the first transaction of its kind in the industry. It accepted another five payments through cryptocurrencies in October, but because of “incremental costs and regulatory uncertainty” of the digital currencies, the company won’t broadly accept Bitcoin, Dogecoin or Ethereum for now.”

Mike Wheatley of Realty Biz News eloquently comments on the move, noting that:

“The lack of demand for crypto-based mortgage repayments is perhaps evidence of what many cryptocurrency naysayers argue – that crypto users primarily see it as an investment rather than a replacement for money. Crypto prices have risen spectacularly this year, but the vast majority of transactions continue to be trades as opposed to people buying and selling things or paying for services. That’s not to say bitcoin and other cryptocurrencies are bad investments, as many proponents claim they’re more a store of value than a currency for transacting. And of course, the value of bitcoin today is more than five-times what it was this time last year. Ethereum, meanwhile, is up more than 10 times.”

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