Will We Have a Wave of Foreclosures?

You may hear some people say that they are going to wait till the wave of foreclosures floods the market before investing in real estate. If this is your mindset, you may want to take a look at some of the data before waiting too long. 

The reality is, there simply are not a lot of people being foreclosed on right now. If you look at the data below, the bar graphs indicate the amount of loans in the USA that are in default. The blue bars show the percentage of loans that are 30-60 days late and the orange shows loans that are 90 days or more late. The red bars indicate the number of loans actually in the foreclosure process. If you look at the number of loans in the foreclosure process today in 2021 and compare that to the recession of 2008 you will see a very stark contrast.

More homes were being foreclosed upon in the run up to 2008 than are being foreclosed on now. Even when the eviction moratorium comes to a close the number of people who will lose their homes in foreclosure is extremely low. People have too much equity sitting in their homes to let the banks take it back. Some sellers will sell to get out of debt or do a loan modification with their banks. Granted, there will be opportunities with all of the mortgages that are currently 30, 60, and 90 days late, yet it will not be to the same degree as the previous recession.

As of right now, the number of mortgages in foreclosure is dropping. According to Attom foreclosure data, January to June 2021 foreclosures are down 60.68% from January to June 2020 which is down 78.05% from the same period in 2019. Foreclosure starts are down 63 percent from last year, and bank's actually repossessing properties is down to the lowest level since tracking for this data began in 2005.

Video On Lack of Foreclosures

In summary, the number of loans in foreclosure in 2021 is a fraction of loans in foreclosure compared to 2008, homeowners have so much equity they are unlikely to lose their home to the banks, and if you are waiting for a flood of foreclosures to hit the market before you start investing you will be waiting a very long time. There are deals in every market. You just need to know where to look. Rather than wait, take action and find some deals that work for you!