Calculated Risk: Second Quarter Update: Late Payments, Foreclosures and Risk Disclosure

by Calculated risk on 09/15/2022 09:30:00 AM

Today, in our Calculated Risk Real Estate Newsletter: Second Quarter Update: Late Payments, Foreclosures, and Risk Exposures

Brief excerpt:

Last year, I pointed out that foreclosures, along with the expiration of a large number of foreclosure plans, would not lead to an increase in foreclosures and affect home prices (as it did in the aftermath of the housing bubble).

Here is some data on REOs through Q2 2022…

We will likely see an increase in regional jobs in late 2022 and into 2023 after the moratoriums expire.

This graph shows the nominal dollar value of the residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value, not the total number of other economic items.

The dollar value of 1-4 family-owned residential properties (REOs, foreclosure homes) decreased slightly from $788 million in the first quarter of 2022 to $784 million in the second quarter of 2022. (It likely decreased in 2020 and 2021 due to Stop foreclosure and foreclosure programs and home prices increases).

The bottom line is that there will be an increase in foreclosures late this year and next (from record lows), but it won’t be the massive wave of foreclosures that occurred in the wake of the housing bubble. Stumbling sales during the housing depression led to consecutive price drops, and it won’t happen this time.

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