Good afternoon —
I've got good news and bad news.
First, the good news: The end of COVID-related forbearance programs will not cause a housing market crash. As Lead Analyst Logan Mohtashami writes in his latest article, industry fears about the worst-case scenarios for forbearance — rising to 10, 15 or even 20 million loans — never materialized.
The most we ever saw was about 5 million loans in forbearance, and now that number is down to 1.7 million. Mortgage holders today have a much stronger credit profile than those in the last foreclosure crisis and many did not lose their jobs. In the end, it's the forbearance data that crashed, not the housing market, Mohtashami says.
"In retrospect, we can say that forbearance programs have been one of the most successful government-sponsored economic plans ever created to help American homeowners," Mohtashami writes.
So what's the bad news?
Housing inventory is still way below housing demand, and 1.7 million homes spread out nationwide is not going to put a dent in that. No one wants to see homeowners forced to sell, but with home prices way up over this time last year, forced sellers could be getting a windfall. And, more inventory multiplies the opportunities for other homebuyers as well as their real estate agents, appraisers, lenders and title companies.
"For those mortgage holders still in forbearance programs, there is a significant difference between forced selling when your home is underwater, mortgage rates are higher and there are unfavorable demographics, versus the current situation. It is a great time to sell…"
And it's a great time to be thankful that many of those who had to put their loans in forbearance ended up with a soft landing, even if it didn't help inventory. Definitely a glass-half-full scenario.
Until tomorrow —
Sarah Wheeler
HousingWire Editor in Chief
EmoticonEmoticon