HomeNewsForeclosures Reportedly on the Rise: How It Is Affecting Housing Market

Foreclosures Reportedly on the Rise: How It Is Affecting Housing Market

by Victoria Santiago
(Photo by Justin Sullivan/Getty Images)

Foreclosures are on the rise in the US this year, and this uptick has a lot to say about the housing market. In January 2022 alone, there was a seven-fold increase in foreclosure starts compared to December 2021. There were roughly 33,000 loans referred to foreclosure, according to mortgage data.

That’s not the only increase, though. The actual number of homes repossessed has gone up, too. Data shows that lenders repossessed 2,634 homes in February 2022. Compared to last year, that’s an increase of 70%. However, that number is down 45% from January.

At a Glance

  • Foreclosures are skyrocketing compared to last year.
  • Many safety measures from the pandemic are wearing off.
  • People are beginning to recover, and those who aren’t might be suffering long-term financial problems.
  • Even foreclosures are going for a lot of money.

These Foreclosures Mean Many Things For the Housing Market

This uptick in foreclosures signals many things. For one, it’s an early sign that many of the pandemic-era protections for homeowners are starting to wear off. Millions of people were able to get mortgage forbearances during the pandemic that put their monthly payments on hold. Since then, many of them have gotten back on their feet and ended their forbearances.

That means that the economy is healing. However, things aren’t completely back to normal. America lost tens of millions of jobs during the pandemic and we haven’t gotten them all back yet. And even though many are able to make their payments, others still can’t.

Those that have remained in forbearances this year might be more likely to suffer from permanent financial troubles. When their forbearances end – and they will soon – they’re less likely to be able to resume their payments. The forbearance period for many is scheduled to end soon. There’s already a backlog of loans that are in loss mitigation or past due.

Demand and Prices For Homes Are Up

That being said, the housing market is going strong. However, the demand for homes is far exceeding the available supply, so prices are up. On top of that, mortgage interest rates are near record lows, so more people are looking to buy.

With the rise in foreclosures, it might be tempting to buy one. But even foreclosed homes are getting pricey, thanks to all of the competing buyers. If you still want to buy, Yahoo! Finance says there are a few different types of foreclosures to look out for.

Firstly, there are pre-foreclosures, which is when a lender notifies the homeowner that they’re in default. There are short-sales, which is when a homeowner tries to sell the home for less than the mortgage value. Sheriff’s sale auctions are also common, which is where homes in default are sold at courthouses.

If you’re looking for foreclosed homes, check everywhere. They may be listed in newspapers, on MLS sites, or anywhere in between.