Fears that there would be a flurry of home foreclosures with the end of moratoriums haven’t played out.
Yes, the number of foreclosure filings is higher than a year ago when federal pandemic programs halted most home forced sales by lenders.
But home foreclosures around the country remain low.
Nationwide, only 19,479 U.S. properties were filed for foreclosure last month, according to a new report by Attom Data Solutions.
“After an initial surge following the end of the government’s moratorium, it appears that foreclosure activity may be slowing down as we move towards the end of the year,” Rick Sharga, with Attom Data said in the report. “Despite concerns about a pandemic-driven wave of defaults, mortgage delinquency rates and foreclosure starts have continued to decline due to government and industry programs, and a recovering U.S. economy.”
With housing values across the U.S. at record levels, most homeowners who are threatened with foreclosure can sell their properties to cover the debt. That’s why most housing analysts were skeptical of early predictions that the COVID-19 pandemic would result in flood of home foreclosures.
While some investors had hope there would be a surge in distressed properties they could purchase, very few foreclosed houses have entered the marketplace.
In November, nationwide there were only 2,292 completed foreclosure sales. New York City led with 664 home foreclosure starts.
Houston was fourth in the country with 384 foreclosure filings.
A chief reason home foreclosures remain so low is the large amount of equity most homeowners have in their properties. In the third quarter of this year, U.S. homeowners had a whopping $3.2 trillion in residential equity — up by more than 30% from mid-2020, according to CoreLogic.
That works out to an average equity gain of $56,700 per borrower since the third quarter of 2020.
“Not only have equity gains helped homeowners more seamlessly transition out of forbearance and avoid a distressed sale, but they’ve also enabled many to continue building their wealth,” Frank Martell, president and CEO of CoreLogic, said in a statement.
In the third quarter, only a paltry 1.3% of homeowners with a loan owned more than their property is worth.
