Mortgage forbearance is a government program that provided reprieve from mortgage payments to Americans when the pandemic took a toll on their incomes. Although it did not forgive this debt, it essentially delayed payments to allow Americans to get back on their feet financially.
With most forbearance programs coming to an end now, we are seeing that most Americans that sought out this relief have now exited the program and are back on track financially. As of mid-November, approximately 1 million Americans were still in a forbearance program. This number is considerably lower than the approximately 5 million Americans that were in forbearance during the early days of the pandemic.
The foreclosure outlook
Most borrowers that had the option to skip payments as part of the forbearance program actually kept paying. This alone makes it highly unlikely that we will see a surge in foreclosures flooding the market in the coming year. Below are few observations from the market:
- We are expecting to see around 180,000 foreclosures in coming year.
- Prior to the pandemic, we were averaging around 500,000 foreclosures per year.
- 73% of borrowers currently in foreclosure have equity of 20% or more.
- 28% of borrowers currently in foreclosure have equity greater than 50% in the third quarter.
In the event that borrowers find themselves with financial challenges, it should not be at all difficult to sell their current home. Buyer demand continues to be at record levels and we expect this to continue into next year. Although mortgage rates are expected to rise slowly, they will still be at low levels from a historical perspective. The bigger challenge for financially challenged home sellers will be where to move to. With rental prices rising dramatically and the vacancy rate being extremely low, this may present significant challenges for these sellers.
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!