Will foreclosures collapse 2024 home prices?
Foreclosures Collapse 2024
GoWpNow and The Warburton Team
The results can clearly be seen now. There is low housing inventory because homeowners do not want to sell and lose a low interest fixed rate loan.
Millions of loans in the USA were made with no tax returns to borrowers with low fico scores and fictitious income declarations. These were called “stated income” loans. Banks seduced borrowers with teaser adjustable interest rates which sometimes tripled over three years. Millions of homeowners were stuck with payments that they could not afford. As prices declined, borrowers simply walked away from homes they could not afford.
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Over 85% of first mortgage home loans in the USA are fixed rate with full income verification in 2023.
According to the Mortgage Bankers Association in the third quarter of 2023 “The percentage of loans in the foreclosure process at the end of the third quarter was 0.49 percent, down 4 basis points from the second quarter of 2023 and down 7 basis points lower than one year ago. This is the lowest foreclosure inventory rate since fourth-quarter 2021.”
The banking industry uses the term “delinquent” for loans 30 days or more and default. The term “seriously delinquent” is used for loans 90 days or more in default. Seriously delinquent loans are at record lows in the United States at the end of 2023.
Why would anyone willfully default on a loan below 4%. If they relinquish their home where will they live? It will cost them more to live in a rental home and they lose the security of homeownership.
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It’s true that “nothing goes up forever”, but the housing collapse of 2008 was an extraordinary event that had not been seen in the United States since the Great Depression almost 100 years prior.
Real estate prices are cyclical so expect fluctuations based on supply and demand, the job market, affordability by community and the condition of the local and national economy. However in 2024/2025 it seems very unlikely that dramatic price reductions will take place in any urban market where supply exceeds demand. Until new construction dramatically increases the number of available housing units, the demand for homes in most USA cities will continue to exceed supply.
At GoWpNow, we have always believed that homebuyers should focus on stability and well-being through ownership.
If the objective is to create “home” in the long term, then market fluctuations and “investment” thinking should take a secondary role in the home-buying thought process.
GoWpNow and The Warburton Team have a dedicated group of licensed concierges standing by to answer questions and help you in your search
Thank you for considering GoWpNow and The Warburton Team as your partner in this exciting journey. We look forward to assisting you in finding the property that suits your needs.
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