Whether or not foreclosures are on the rise, and what it means.
Today, we’re answering the question: How will the increasing number of foreclosures affect the market?
Are we about to see a tsunami of foreclosures like in 2008? The short answer is no, due to the market conditions. In the last 10 to 12 years, we have seen an increase in market activity. It has gone up steadily, especially in the past two years. Also, we’ve seen very low interest rates, which have driven up buyer interest.
Now we’re seeing government intervention in the form of increasing the short-term interest rate, which is affecting the long-term mortgage rates. The market is getting more inventory, and we’re starting to hear some economic news that people are losing their jobs or maybe bought their houses too high last year.
Then is it possible that we’re going to see more foreclosures? Yes, it is. However, it’s not going to be a flood like we saw in 2007 and 2008. Due to the minimal number of foreclosures that we’ve seen in the past, this looks like it’s a minimal and momentary spike.
Historically, foreclosures have ranged between 1% and 3% of the market. In recent years, we’ve seen minimal foreclosures because of the market rising. An increase in foreclosures could be a good thing because it’ll help alleviate some of the pressure of not having enough inventory out there. Frustrated buyers will have more options.
Still, we don’t expect a huge flood of foreclosures. We’re not going to see what we saw in 2007 and 2008. We may see an increase, but that will get the number back to where it has hovered historically.
We hope this eases some of your concerns. If you have any other questions related to real estate, please reach out by phone call or email. We’d love to help!