It doesn’t matter as the deadbeats aren’t taking their “where is your minimum payment” calls.
The beatdown is coming. These late pays are the beginning.
Just wait it out as mortgage delinquencies will also rise, and the fire sales will be great and will more than offset high interest if you can get around or in front of the institutional and corporate buyers.
IDK. If someone has a low rate and is locked in I feel like they’ll let other things slip before they leave their home, perhaps even take roommates or co-living with family who otherwise would be renting to retain their home.
If you see homes selling significantly below market it’ll likely be privately owned and in poor repair, or smaller rental outfits offloading properties that have high turn or need significant repairs as well. The big players and owners financially stable enough to keep their home (if nothing else) are staying put.
Agreed but that only works to a point. When you can no longer afford your doubled homeowner’s and car insurance, are behind on student loan and credit card payments, your tier 3 tech supplier employer no longer has any clients to service due to layoffs, and you then run out of grandparents and friends to stuff in your overfilled three bedroom house - at some point something has to give.
Oh wait, that’s just California.
Or is it?
If (Okay, probably a when…) it gets that widespread and dire, frankly I have other much more safety related concerns in mind aside from buying a nicer home. Once the bottom really falls out into widespread strife your title deed won’t be worth the rag it’s printed on.
Agreed.
If you want to see what the economy really looks like for 50-65% of the US right now, go to your local Goodwill or check out Facebook Marketplace. The lines at Costco are shorter, the carts are less full and there is concern out there.
Interest rates on a mortgage are not the primary topic on most US residents’ minds.
Don’t forget about all the people that took out equity…and are still pulling it out at even higher rates. 8-10%. That can really bite you if you lose your job. They do that to pay off debt. Then just take on more credit cards, vicious cycle and using their most important asset
This was said during the mid 2000s drop.
Didn’t really happen as bad as people thought or wanted it to because banks took forever to foreclose.
History repeats itself and this time around, owners are more financially sound and have much cheaper loans.
Outside of a black swan event, what is going to make people sell?
Yup – bunch of these geniuses refinanced $100k+ in credit card/personal loan/car loan debt into their mortgage for a lower monthly minimum payment over the next 30 years and then went right back to spending above their income level. It’s how sellers walk away with $10k or $20k after selling a property they owned for 20+ years that doubled/tripled in value that they had to sell at a discount because they neglected the house to the point where only investors were interested.
Nationally, it seems like residential real estate is generally okay. Multiple offers are back in many markets and lot of investors are flush with cash and snatching up residential property for rentals. Commercial real estate on the other hand… Unless rates fall meaningfully, probably going to have more issues/foreclosures.
Another prospective – If you look at home price to income ratio, the US is still relatively cheap compared other countries.
What didn’t really happen?
“Beatdowns and mortgage delinquicies causing fire sales”
It was predicted to be much worse but banks kicking the can allowed many owners to squat or homes went to shadow inventory.
But again, depends on region.
Their incomes just aren’t keeping up with costs right now too. Sure they could prob do better, i bet they all have iPhones for $100/mo and the $200 cable package too. But that’s just the way America is. Constantly in debt. It comes down to lack of financial education in our schools and the need for instant gratification.
There’s more people living in rvs right now then ever before. Those are the ones prob not on drugs. The druggies are just all over the streets in any city in the country. Plenty of people lost everything in 08 and never recovered.
But I agree there will be bailouts and bailins if this happens again. Just not sure how much more can be printed to support that. Maybe the mythical trillion $ coin will show its face. Nothing about the debt makes sense and the fed finally admitted that this week, which is scary.
Where are our children going to live? The average house in America needs a 115k income, that’s with no other debt! Yet the average household income is 40k less than that. Perhaps it’s a good thing, we need to go back to multigenerational housing. It’s way smarter and less wasteful. But not everyone has that option
The Fed: Nothing about this debt makes sense
Also the Fed: Let’s just print more money
I’m not sure what your experience was or what you were basing this specifically on, but that is exactly what happened post 2006–2008 with the real estate market, regardless of how long it took for foreclosures on some properties.
Nationwide (other than some areas like New York City, the Bay Area, LA and a few other cities/regions) values tanked, personal bankruptcies skyrocketed and deals were everywhere.
In many ways, that is what gave institutional investors and companies that were buying up properties the advantage they needed for real momentum.
Definitely… and the whole monthly subscription model is part of it. $200 for Microsoft office feels high, but $9.99/mo feels better.
I was also reading how the old school layaway that was common basically came back into existence, but with immediate gratification through financing at 0% (which tacks on back interest if you dont pay the full balance off in the specified amount of time).
That was the opportunity for institutions to come in at the bottom of the market, but another huge factor was that technology was finally available at a reasonable cost around that time to actually make it more viable option to actually track and manage a portfolio of SFHs on a large scale.
I think people forget how dire the predictions were… it should have been much worse.
But as @Jrouleau426 mentioned… lots of bailouts kept it from being as bad.
No one predicted rates would go DOWN, and just like people say prices go down when rates go up, when rates go down… prices don’t crash as hard as they should.
If anything, we learned that the Fed, banks and investors will prop up real estate as much as they can. That’s why homes values are so high even with high interest rates… bizarro fundamentals.
Well, I don’t really agree. The bailouts during (after) the Great Recession for residential homeowners were generally too little too late, and the foreclosure rate was ridiculously high. The bailouts then were mostly for the banks and institutions, unlike Covid where individuals were bailed out directly and generally kept their homes.
As you can see below in the chart, the GR foreclosures were indeed crazy high and now year over year for January 2023 (a year ago) the foreclosure rate was once again skyrocketing.
I will get some current numbers as well.
$800 billion is chump change these days in comparison to what would be needed.
That chart might be misleading.
While the bank may report a foreclosure, that does not indicate how long the owner stayed in the house after that was issued or if the house ever went back on the market.
It’s those shadow shenanigans that skew things and again, as you said… this happened more in the high value real estate areas like where I am.
I would have liked to stay in my “foreclosed” home for 3 years mortgage free. 
