Dear Foreclosure Hunters,
With unemployment hitting levels worse than the great depression people are wondering when we will see the fall out in the housing market. When will we see all the foreclosures which seem inevitable? Over 20 million job losses in April alone.
COVID 19, Foreclosures and the Impact to Housing
The country, as I write this in May, to a large extent is still shut down. The world as we know it has changed except for one thing. The housing market is still buzzing. I am not kidding. The housing market is buzzing. With the initial COVID shutdown we saw purchases come to a halt but as the country slowly starts to reopen, we are back to the world of multiple offers and house prices increasing.
I cannot legally go and get a haircut, but my clients are competing with 20 people for a house. I am seeing this across the country. So, what gives?
This pandemic has been subsidized by the United States. This is not a political statement. This is a fact. The government reacted swiftly to the crisis and introduced measures to lessen the economic fallout. By allowing loan forbearances and passing measures such as stimulus checks and increased unemployment amounts the effect on the economy has been dampened from the absolute catastrophe it could have been had no measure been put in place. This is a good thing.
The million/billion-dollar foreclosure question is how long can the government continue to subsidize the economic impact and when will this all end? There is no cure and there is no vaccine at this time. Until there is, it continues to spread. Depending on who you talk to a 2nd shutdown is inevitable.
Will people be allowed to defer their mortgage for another year from then or how will that work? Can the government really do more stimulus checks? We have already seen that the increased unemployment has led to labor shortages as encouraging someone to go back to work when they make more from the safety of their home not working has been an issue.
How can we keep everything afloat if COVID closes us down again?
And the big question I see is what about all the states whose revenue has been severely impacted?
How will they pay their workers in the upcoming years?
If you look like a state like California, we already have high state income tax, if that gets increased you hurt people again. There is not an obvious solution to the pending “bills” that will need to be paid.
In reality, we will not see the full economic impact for over a year. If you just look at the forbearance portion, people have up to one year that they can not make their mortgage payments and it is ok. It is not until that window is up +6+ months to see if we are going to get a flood of foreclosures.
Personally, I hope we avoid foreclosures and depression or recession but for all my foreclosure buyers start “stacking cash” now and watch what happens over the next two years. Patience as they say Is a virtue.
Thanks for reading and stay safe,