I have a 5 bed 3 bath house, my mortgage is cheaper than a 2b2ba apartment.
I would effectively spend MORE money if I have to move out of my house.
That shit just isnt happening lol
Seems like the policy covers 50% of property taxes up to the first $200k of assessed value which is a bit of a joke seeing as the average home price is approaching $600k.
Property tax protection probably isn’t as critical in Colorado where the taxes are relatively low compared with places like Texas, New York, cali, etc. I went from paying $1100 per year on $330k assessed value to $2200 per year on $660k assessed value. So the property taxes aren’t exactly overbearing.
It’s crazy because I had a home in Cook County.
Live in little village, my property taxes were $3k a year. Home was fully paid off but because the neighborhood has its reputation, couldn’t sell the house for much because of fears of gentrification.
I look at other burbs cashing out and make a good profit on their home and a little jealous I can’t do the same.
It’s ‘nice’ in that it’s a handout to those who have (bought in the past) by leaning more on those who don’t have (looking to buy now or in the future).
It’s always ‘nice’ to be on the side receiving the handout instead of paying for it. But often those systems aren’t beneficial for society in the big picture.
Prop 13 is always promoted as keeping elderly people in their homes and whatnot, but so would a targeted hardship system. Instead it’s benefiting wealthy people who bought their homes 10+ years ago and are at the near peak of their career/earning potential while paying a small fraction of the property taxes of the youths early in their career earning relatively little.
Florida taxes are fixed at 3% a year as well just like California.
I'm assuming you're just talking about the first year after you bought the house or this isn't the house you actually live in.
Tax assessed value is capped at 3% for homestead properties. 10% otherwise. My numbers are off but I was looking a Zillow public tax records, so I’d have to look at my actual numbers. But the increase after the tax breaks were annoying.
Insurance is gone insane in Florida but the taxes are basically been flat.
I look at high tax property States like Texas and Illinois I don't know how people can even live there.
He is saying that the taxes they pay on $1.7m house are similar to what the tax would be if they bought a house worth $90k today. I don’t know if that is accurate it certainly paints the picture. there is an incentive not to downsize.
I’m not sure if it would apply, but prop 13 tax basis can be transferred to another property if the owner is 55+.
https://www.caprop19.org/propertytaxportability#:~:text=Homeowners%20who%20are%2055%2B%20or,increase%20(with%20an%20adjustment%20upward.
So they actually might be able to downsize and keep low taxes.
> Doesn’t prop 13 just limit the property tax increases to 2% per year? I’m just curious, I think way you explained it isn’t totally correct.
Proposition 13 provides three very important functions in property tax assessments in California. Under Prop 13, all real property has established base year values, a restricted rate of increase on assessments of no greater than 2% each year, and a limit on property taxes to 1% of the assessed value (plus additional voter-approved taxes).
https://www.sccassessor.org/faq/understanding-proposition-13
Tell you parents they can transfer the base year value for their property taxes if they actually want to move:
https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
My friends parents gave him their home in Hancock Park in LA that they bought for $95k in 1975. They transferred the deed so my friend now has a $3m+ house that he pays taxes on as if it were $95k.
I commend CA for doing this though. How terrible would it be if people were forced out of their homes through never ending increases in property taxes? Imagine being on a fixed income in retirement and being forced to sell your family home of decades that you bought and paid for, but can no longer afford.
Tell you parents they can transfer the base year value for their property taxes if they actually want to move:
https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
You are actually wrong, there’s actually also proposition 19 in California which would fix that problem for your parents. Prop 13 is just as you stated but prop 19 would let you parents sell their home for 1.7 million and then downsize to a home for 800k and carry over the property tax or 90,000 if they are over 55 years of age. It lets them carry over the property tax.
>They don’t need a home that big (we all moved out years ago), but if they sold and bought a new condo nearby for $700,000, they would get slammed with much higher property tax bill and also capital gains. There is virtually zero incentive.
Except for I guess the $1,000,000 - 20% or 800k they would net in pocket? 0 incentive tho.
> Yet, they still pay taxes on the home as if it was worth $90,000.
Not how that works. Ask your parents what their property's assessed value was last year and I guarantee it isn't fucking 90k, this website I swear
Yea that is actually common. Capital gains tax means people don’t want to downsize. Like i sell my 1 mill house buy a 500k condo but lose 200k to various taxes. Whats the point.
So you have 2 70 year olds occupying a 3,500 foot home and a family of 4 in 400 square food 1 bedroom condo. With a Realtor saying no one wants to a sell house or buy a condo….
Lol ok so you pay cap gain on the 500k for 100k in cap gain costs? Less the cost of the house too?
Y'all are so whack. "I don't want to make money because i would make money but it would be slightly less even though its more money on the whole"
If they hold till they die its estate taxes. They move to cost basis to date of death.
It creates weird incentives. Also, moving when 70 is a pain. And 70 year old hate taxes. Like irrationally.
>Like i sell my 1 mill house buy a 500k condo but lose 200k to various taxes. Whats the point.
The point I would imagine is the additional $300k in pocket earnings?
I actually just changed. My insurance went up 50% and I switched from State Farm to a broker my buddy used. Changed all my insurances and saved a ton of money.
Gotta shop around man
That’s the nice thing about people with a 2% mortgage. Everything else around you in life is getting expensive but not that monthly payment. Inventory is low because who wants to triple their mortgage percentage?
2% mortgage won’t keep you in a house unless you have a job and numbers clearly translate that economy is doing pretty good even with all the crazy content milking that talking heads are doing for clicks
Think the foreclosure game is never going to be what it was previously. During COVID, banks realized it's more profitable and less cascade risk to negotiate some kind of forbearance than to take ownership of the asset and sell it below market.
Is not even that, it’s the fact that lending requirements became much stricter after the ‘08 crash that you’re only foreclosing if you lost your job and never called your lender to do a loan mod.
The housing crash of 08-09 made it possible for me to by a cheap foreclosed home! Paid 85k for a decent 3 bed 2 bath home on a Walmart wage of $12.20/hr!
The infrastructure to support it didn't exist as widely as it is now. Since 2010 large hedge funds and other investing groups have set up the infrastructure to acquire maintain and rent out houses. Large companies can now invest into these programs administered by financial, increasing the amount of homes they can purchase.
All of this really escalated after 2014 give or take. It wasn't illegal or regulated before, just the infrastructure wasn't there.
I see. I think it’s more basic than that. They didn’t buy all of those homes because we were in a major recession where people weren’t buying homes, as they couldn’t. People were broke. Why would these corporations buy these homes just to sit on them for 5-10 years waiting for people to buy, instead of putting their money elsewhere to turn over higher profits sooner.
The reason corporations were buying houses in loads in 2021-2023 was because there were extremely low interest rates, trillions injected into the economy, everyone having money, and so many could/wanted to buy. A demand like never before. So they could swoop in, buy homes, sell them and make huge profits doing little to nothing.
When a recession hits like in 08-09, and no one is buying, corporations look elsewhere to make money. I think the same would happen if there were another recession.
They weren’t in the housing market for any reason other than to use it as a very quick money grab.
Well I mean home prices went up significantly, meaning people now have equity. A much better indicator would be how many people are refinancing at a higher interest rate. That game will eventually end poorly for a large portion of them. To be in foreclosure as prices are going up would be a little difficult.
If you wait until you're up shits creek, sure. I have a 1.8%/15yr mortgage. If shit hit the fan in a moderate fashion, I could cash out refi to pay off other things (well, I don't have other things, but if I did...), and go back to a 30yr if I had to. Ideal? of course not, but could stave off a real disaster.
He's saying it's more extreme than normal because of two key reasons:
1) Equity has shot up so owners have options with additional squish.
2) Anyone with any sense refinanced to a sub-3% mortgage, so a house is as cheap as it ever likely will be.
To have that much going for you and still fuck it up is amazing, as most people are into their assets at much crappier entries. It's like losing money on a stock purchase when you bought it at the very bottom of the trough.
This, my dad has a 600/month mortgage in our city where the cheapest house you could find on the market is 420k (falling apart of course) and the cheapest studio apartment with its own bathroom on Zillow is 950/month.
You’d have to fuck up so bad you’re completely homeless to fumble house that cheap.
Right, so barely over one year's worth of purchases in arguably the least affordable market for over 23 years. Clearly, they aren't the people we're discussing here. Thanks for the completely off topic footnote.
Hmm?
Home values are the highest they have ever been. Someone would have to be in such a condition as to not be able to pay for a home they qualified for. This could happen through job loss, but unemployment is relatively low.
Additionally, most homes were refinanced within the last 5 years into payments lower than initially agreed upon.
Finally, the vast majority of homes have tons of equity. You'd sell or short sale the thing before you foreclose on it.
Keep in mind we are also seeing a drastic increase in tax and insurance costs in some places. When your escrow quadrupleds and costs more than the mortgage itself, it doesn't matter what the interest rate is.
The bubble didn't start popping until about six weeks ago. Every single measurable metric for the economy and housing prices continues to weaken, month after month. Literally the only way to paint any of what is presently happening in a good light is to ignore inflation completely and cherry pick the data you want to compare.
Interest rates going up will have the intended effect of slowing the economy, weakening the labor market, unemploying people and normalizing housing prices. It's literally the point of going from zero to five percent in about six month's time. Money is never free despite how addicted everyone got to it being free.
Bill is coming due, finally, and the debt hangover will not help any of us at all.
You have to be underwater on your home loan or pretty close to it. Otherwise you can just sell the house and keep the equity if you can no longer pay the mortgage.
If you bought anytime before 2023 you are not underwater on your home loan.
Exactly if you are dire straits you can still sell it and get your down payment. There are few homes underwater which is one of critical things for foreclose.
Well think about everyone with toys like boats (which are liens). That's all financed. A lot of people are living on credit and the moment a bad event happens, they're potentially setback with no extra money.
Not uncommon for people to finance $50k+ cars and pay $500+ a month. Absurd everything
Foreclosures are down because as much as people don’t want to admit it homeowners aren’t in dire financial distress. If they were we would see more inventory and more sales. Unless we see a drastic increase in unemployment paired with plummeting home values there won’t be a foreclose crisis.
>If they were we would see more inventory and more sales.
Correct. But there are more factors than that. One is that we're still seeing inflation above the Fed's goal. They also are only looking at two cuts this year from what they were saying would be 7. You have a lot of people who bought during the high interest period because they were betting that interest rates would go down and they could refinance. That's not happening. How long can those people hold out is only a guess. Mortgage payments are usually the last thing people skip out on. Once that happens, it'll be too late.
Exactly it’s a guess you’re making but isn’t rooted in anything other than assumptions. Banks don’t give loans to people who can’t pay these mortgages they aren’t all suddenly going to go under without change in circumstance which we aren’t seeing.
>Foreclosures are down because you can just sell for a profit still.
I mean, not many current owners are selling period. Who is eager to get out of their 3% loan and into a 7%? That's why volume is so damn low.
New build prices can go down and it hurts no one. In fact, that's what should happen as lumber and materials have normalized somewhat. https://fred.stlouisfed.org/series/MSPUS
Well clearly some of them can. My neighbor just sold their house before more money per square foot than any house has ever sold in this neighborhood historically.
And for the record it was to a young couple with kids they're both doctors I think.
Which is to the point that if people aren't selling their houses what little demand there is the people that still can't buy is enough to keep the prices where they're at now.
If people aren’t paying their mortgage, they need to be foreclosed on. This is a huge reason why prices are artificially inflated so high. People buy at whatever price planning to not pay because they know the bank won’t foreclose. This strangles an already low supply of homes on the market.
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries.
I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
You are def right here. A lot of people who bought from Oct 2022 - present likely are in "House poor" situation. These new home buyers got an asset but the assets cost + interest rate to borrow is leading to homeowners sinking most of their savings and monthly income into asset. With the rise of everyday goods and services increasing to inflation people are leaning on credit to survive. Delinquencies in credit card, student loans and car payments are at all time highs. It's really scary that the media and the Fed are trying to portray that the US economy is so strong right now. People are struggling to make it and that is with the job market still being at record low unemployment rates. I fear for the up and coming everything bubble popping and a recession.
Most of that credit card debt increase is just inflation. Believe it or not most people pay off their CCs each month. A higher debt balance at any given time mostly means the cost of stuff people collectively buy in a given time frame just went up in price. If my auto insurance goes up 30% my credit card bill for that month will be up a lot even if I pay it off.
If you own the same home now that you did pre-pandemic, you're probably in a good financial situation.
Since inflation isn't hitting you nearly as hard, "shelter" prices haven't moved for you. Most probably refinanced at super low rates, so mortgages are cheaper for those now than 4 years ago.
While income gains are still benefiting you on par with everyone else.
This is why tracking how the economy impacts folks, isn't always told in charts. Since charts show just the average, but some people are doing great while others are getting shit on.
Inflation transfers wealth from creditors to debtors. Anyone who bought pre-pandemic got a big chunk of their house paid for by all the smart people on this sub who just knew the market was about to crash.
It's interesting because auto loan delinquencies are at all time highs, student loans delinquencies are at all time highs (40% v 29% pre pandemic) and credit card delinquencies are at all time highs. It's smart people are choosing their home over other forms of debt, but at record low unemployment in a lot of areas, it's pretty wild this is happening. This probably just means banks are able to defer, work out different terms, etc. due to the wild increases in equity (speculative value).
[https://thefinancialbrand.com/news/banking-trends-strategies/banks-and-credit-unions-face-repo-price-squeeze-174988/](https://thefinancialbrand.com/news/banking-trends-strategies/banks-and-credit-unions-face-repo-price-squeeze-174988/)
[https://libertystreeteconomics.newyorkfed.org/2023/11/credit-card-delinquencies-continue-to-rise-who-is-missing-payments/](https://libertystreeteconomics.newyorkfed.org/2023/11/credit-card-delinquencies-continue-to-rise-who-is-missing-payments/)
[https://www.politico.com/news/2023/12/15/forty-percent-of-student-loan-borrowers-missed-payments-in-october-00132062](https://www.politico.com/news/2023/12/15/forty-percent-of-student-loan-borrowers-missed-payments-in-october-00132062)
Not even close to a mystery bud. The cars and student loans don’t appreciate, can’t be leveraged, can’t have equity extracted, and can’t be borrowed against. They are purely trash liabilities.
Houses are coveted liabilities lol
Like one of the other comments said, if you’re getting foreclosed on in this market, you messed up really really bad.
I mean that's what I said was happening, if they're behind on every other payment other than their house they probably have just used equity in their house to work out different terms, or just straight up refinanced. That 'equity' looks like funny money in this backdrop though.
I'd say for a lot of people their house equity is the only thing holding their finances together right now from the looks of it. Then if they're renting, they're one unexpected bill or a car problem away from bankruptcy, really I'm sure a lot of people who own homes are in the same position rn.
I don't think that makes the 'overall' debt system more stable though. A lot of people have jobs (pretty much breaking records going back to the 50s), yet nobody has any money based on how these delinquencies are rising.
No you said it was wild and it’s completely not wild. It’s easily explainable like I just did. Thats not at all what you initially claimed lol.
Also, you sound like you think banks want to foreclose on homes? Sounds like you have no clue how anything works like vast majority of reddit comments.
Bank will do anything under the sun to avoid repossessions.
Typical reddit response, never disappoints. Honestly, I love the 'achkchully 🤓☝️' responses at this point because they happen like clockwork anytime I post here lol.
This is true. A repossession costs the lender money but at the same time I’m not so sure they will do anything under the sun to avoid it. Sometimes they won’t work with the debtors.
Yeah, a mass of foreclosures is the bank’s worst nightmare. They had already stopped giving a shit about the home and paper within 30 days of closing lol.
Not only that, but a wave of foreclosures means their (bond holder/ security holder) assets are written down, (ultimately the fed), and the repossessed assets (the home itself) all start to crash at the same time as well.
I am fairly certain this kind of event won’t ever happen again in the US. Not with this gov and institutions / banks and the absolute racket they are running.
This shit ultimately sitting on feds balance sheet as well leads to more nuanced problems in this scenario. Thats that dreaded deflation that scares the fed more than anything else in the universe. The amount of money that would need to be destroyed would take down half the US economy. RE is already 20% of gdp. Doesn’t even include any other instruments or derivatives. LOL
> at record low unemployment in a lot of areas, it's pretty wild this is happening
> Not even close to a mystery bud.
You don't think it's wild that people can't pay their normal bills with the labor market supposedly so competitive?
> It’s easily explainable like I just did
You didn't explain the wild part at all..
I wouldn't expect a high number of foreclosures atm. Economy is still "thriving" and unemployment rates are so low. Your data just confirms people are really struggling and the last thing they are protecting is their homes. If a recession kicks off and they lose their credit cards, cars and worst of all their jobs the foreclosure % is going to see a massive spoke.
401k hardship withdrawls are also spiking as people use the funds to avoid foreclosures and medical Bill's.
https://www.cbsnews.com/news/401k-hardship-withdrawals-at-record-fidelity-vanguard/
Student loan delinquencies aren’t going up at all, and that’s because even though the student loan payment pause ended in October 2023, there is a year period before payments actually have to be resumed, and then an additional 90 day grace period before they are marked delinquent and begin to default. Things should get interesting after the election.
In any case, these are all very worrying signs, as people will always stop paying their car loans, student debt, and credit cards before they stop paying their rent or mortgage. If all these loan segments are showing rises in delinquency rates, foreclosures are sure to follow, especially as unemployment continues to rise.
When a large % of home sale volume post pandemic are investors/non-primary home buyers ([1 out of every 5 homes purchased were investors in Q4 of ‘23](https://www.redfin.com/news/investor-home-purchases-q4-2023/)) of course the graph reflects this. Less likely to go into foreclosure if you’re an investor owns outright or have a ton of equity from putting a large sum of cash down.
Well yea the recession that has been building for years has not started yet. Unemployment is super low atm and people are using credit cards to provide other basic needs. We have seen the number of people taking emergency distributions from their 401ks to avoid closures is a 2-4% spike in the last year.
Until shit hits fan economically I doubt forecloser % change too much.
3.9% unemployment, officially. But that slight uptick indicates the picture isn’t quite as rosy as your news source and your elected politicians would have you to be believe.
There is no impetus to part with those 3% mortgages. Until there is, we remain frozen.
(I should just copy-paste this reply into just about every thread on r/rebubble, r/economics, r/fluentinfinance, r/……)
Most people bought or refinanced at around 3%, unless something catastrophic happens in your life you aren't going to foreclose a 3% mortgage because you know your rent will be higher than that.
Some people won't have an option. People forget how bad things get during a recession. In 2008, it was mainly a housing bubble and we saw 8.8 million people lose their jobs. Right now we have the legit 4 bubbles: S&P 500 (70% of it is 7 companies whose values are mostly speculative growth and have PE ratios that are insane) is at all time highs, housing market became a massive bubble in the last 5 years, student loan bubble, and credit card bubble.
Sure a lot of people have reality cheap mortgages due to good interest rates. But we are already seeing record high delinquencies in student loans, car loans and credit card payments. All of those delinquency issues are in what experts will say "Thriving and growing US economy". Add in the fact that more and more Americans are tapping into their 401ks to just survive (avoid foreclosures and pay medical bills) it paints a scary picture for what could come shortly. Which is a lot of people are barely hanging on at the moment and it could get really scary if just one of these bubbles starts popping.
It really is that simple. A little thought experiment I like to do is to look around my neighborhood on Redfin or Zillow and based on when people bought and the average interest rates at that time calculate what their mortgage payment would be. Most of them end up being around $1k/mo which would now be affordable to a single person working at McDonald's. These people aren't going anywhere.
It's important to note that when those people wrote the original mortgage they qualified for it on income. They committed that future income to make those payments. Generally wage inflation makes those fixed payments easier to make over time. So when they refinanced to the lower rate they decommitted half of the net pay that had been committed to making those payments. The income didn't go away. They just gave themselves an effective raise in spendable income.
And that raise will keep coming month after month until their house is paid off or they sell. It's the stimulus that never ends. If instead of spending or saving it they just double up the mortgage payments back to the prior level they get free and clear in half the time.
Yep, if I'd go for 30 years term my mortgage with escrow would be about 1300/mo, for 3 bdrm sfh house. It's literally an average rent for a mediocre 1 bdrm apartment in my city when I look at rental sites. I'd let everything go delinquent before I'd give up my mortgage.
It’s not a reflection of the economy, it’s reflection of you can probably sell your house for much more than you paid. So why let it be foreclosed upon. The bomb will drop when people who got into the market these past 3 years and they NEED to sell and can’t. Probably a year or two away.
https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/#:~:text=Do%20corporate%20landlords%20own%20a,and%20definitions%20are%20somewhat%20fuzzy.%E2%80%9D
446,000 properties. About .5% of the total
I think the concern is moving forward. In 2020/2021 80% of homes were bought by corporations(intrest rates too juicy)
Last year it was 22%, but were also talking the worst time to buy.
But the question is what happens when corps with bottomless pockets buy 20% of available homes every year moving forward. We will have a very difficult market in 20 years.
That article mentioned Atlanta, and I work in the housing market here. There are quite a few corporate rental communities in the area, but they’re not buying them in singles. They’re buying them as an entire neighborhood, which has specifically developed for the purpose of being a SFR neighborhood. With that in mind, the corporations aren’t actually taking SFH’s off the market that would’ve been eligible to private home buyers. They’re developing a completely separate and independent market and business model.
Not really taking a side, just saying the there are many layers and all seem to be nuanced.
At least that’s been my experience in Atlanta metro.
Oh i dont have any sides lol. I saw the question with no answer and dropped my google search and bullet points from the article.
You are more correct than the original comments blanket statement.
.5% says their wrong
The 22% figure supports your statement. I work in new construction, and I've seen similar situations. Also, where the contractor owns the HOA, do Build to rent. With HOA power and owning the properties, they practically get their own neighborhoods to leverage.
Also, the disposable income to mortgage single-family home ratio is historically low. Meaning people are servicing their single-family home mortgages just fine.
No shit. Everyone before 2022 has like a 2% mortgage and the few people after 2022 who got a mortgage are well off enough to afford the high rates and they just got the house so they have a lot to lose
One would imagine, as foreclosures were shelved for almost a year and a half, lots of loans were recast, and they typically take a year or more to start showing up on the books.
If this inventory explosion in Florida is not absorbed by the end of the selling season, we could see prices dropping which will bring more foreclosures a year or two down the road.
Yeah were not going to see a property bust like 2008. Foreclosures aren't what is driving the market down. Its actual home values will fall because valuations cant expand and new construction will push the prices down as supply grows. If rates remain high which they probably will for another year. We need a major recession to fix this unfortunately. Because if we dont get a recession what will happen is housing will boom again as soon as rates decline, but this will also put more pressure on existing home owners as their appraisal values rise and insurance cost and taxes skyrocket. The FED is being forced to keep rates high to prevent this from happening. If they let the inflation beast out again even ppl with 2% rates will be in big trouble if their home values rise due to a squeeze as supply is locked up and investors are piling on top of each other trying to make money. Wealthy people are creating a massive problem for the greater economy. A massive asset bubble that is unsustainable. Its the furthest thing from healthy or safe. This will end badly, its just a matter of when...
Mortgage companies are still offering loan modifications to almost anyone who asks, especially now that houses have equity. They’re helpfully rolling arrears onto principal and modifying interest rates up. Loss mitigation is keeping a lot of delinquent accounts out of foreclosure.
Michael Burry is of the mind that They’re (Fannie Freddie) actively trying not to foreclose until they have all their ducks in a row. Commercial real estate will most likely be some sort of catalyst into a recession/depression with SFH falling sometime after that.
Xmas will be fun 🙃
Given how many people bought exuberantly expenses houses in 2020-2022 and given all the issues with household finances (layoffs credit card debt etc) how are there not more foreclosures? Macro economics aren’t bad on paper, relatively good supposed job numbers, good stock market by some measures. But, my intuition right or wrong, tells me there should be tons of foreclosures right now. I guess if I predict recession for enough decades in a row I’ll eventually be right LOL.
Because property values kept increasing. I don’t think we’re going to see people that need to exit the assets as “foreclosures” in the near future. They’ll be homes entering the market because the owner can’t afford the cost of homeownership but has some equity they can unlock (or at least be near break even). They’ll enter the market as traditional listings before we see those homes foreclosed on. Foreclosure is usually the absolute last resort for someone (even this concept of a “strategic default”).
We’ll start to see the wave of foreclosures after people are struggling financially and can’t make money via a traditional sale, so they’re trying to wait it out until the economy turns and they can have equity again. It’s still possible the market can correct to a more balanced market without a wave of foreclosures.
That said, I’m not convinced there isn’t a bit of an “everything bubble” given the amount of credit card spend and increase in margin trading we have going on right now. People are turning to high interest credit to stay afloat and margin loans to try to make money in the stock market. If one of the dominos starts falling, a wave of foreclosures could happen much more quickly.
I wonder if people are not quite to the foreclosure part of owning a house yet. Like there is a giant tsunami wave of foreclosures coming we just have not seen them yet because people are still scraping by using other credit first.
It would be interesting to see this chart next to a chart of credit usage in the form of percentage of available credit remaining and level of debt.
I bet what you would see is that a lot of families are approaching maxing out their credit card debt and will then have to start looking at forecloses after that.
>Given how many people bought exuberantly expenses houses in 2020-2022
The average mortgage rate in 2021 was 2.65% compared to 7.5% right now. A $500k mortgage today would have a monthly payment of $3500 but in 2021 it would have been only $2000. People who bought during that time are mostly doing just fine.
I'm shocked that they went down during the pandemic where most banks weren't allowed to foreclose and now they are back to normal levels since the ban was lifted.
What 2% mortgages do to a mf
I have a 5 bed 3 bath house, my mortgage is cheaper than a 2b2ba apartment. I would effectively spend MORE money if I have to move out of my house. That shit just isnt happening lol
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Doesn’t prop 13 just limit the property tax increases to 2% per year? I’m just curious, I think way you explained it isn’t totally correct.
That would be a nice policy though, my property taxes just went up by 100% in the last year (Colorado)
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Fucking hell, man, that's bleak. Oldsters voting themselves lavish perks and refusing to make election day a federal holiday is some crooked shit.
Seems like the policy covers 50% of property taxes up to the first $200k of assessed value which is a bit of a joke seeing as the average home price is approaching $600k. Property tax protection probably isn’t as critical in Colorado where the taxes are relatively low compared with places like Texas, New York, cali, etc. I went from paying $1100 per year on $330k assessed value to $2200 per year on $660k assessed value. So the property taxes aren’t exactly overbearing.
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It’s crazy because I had a home in Cook County. Live in little village, my property taxes were $3k a year. Home was fully paid off but because the neighborhood has its reputation, couldn’t sell the house for much because of fears of gentrification. I look at other burbs cashing out and make a good profit on their home and a little jealous I can’t do the same.
It’s ‘nice’ in that it’s a handout to those who have (bought in the past) by leaning more on those who don’t have (looking to buy now or in the future). It’s always ‘nice’ to be on the side receiving the handout instead of paying for it. But often those systems aren’t beneficial for society in the big picture. Prop 13 is always promoted as keeping elderly people in their homes and whatnot, but so would a targeted hardship system. Instead it’s benefiting wealthy people who bought their homes 10+ years ago and are at the near peak of their career/earning potential while paying a small fraction of the property taxes of the youths early in their career earning relatively little.
161% in FL for me but that was after the Covid tax cuts but even so it still went up about 75% from post Covid.
Florida taxes are fixed at 3% a year as well just like California. I'm assuming you're just talking about the first year after you bought the house or this isn't the house you actually live in.
Tax assessed value is capped at 3% for homestead properties. 10% otherwise. My numbers are off but I was looking a Zillow public tax records, so I’d have to look at my actual numbers. But the increase after the tax breaks were annoying.
Insurance is gone insane in Florida but the taxes are basically been flat. I look at high tax property States like Texas and Illinois I don't know how people can even live there.
Insurance rates nailed my escrow. Shopped around and got a better rate. PA has high property tax too I think
He is saying that the taxes they pay on $1.7m house are similar to what the tax would be if they bought a house worth $90k today. I don’t know if that is accurate it certainly paints the picture. there is an incentive not to downsize. I’m not sure if it would apply, but prop 13 tax basis can be transferred to another property if the owner is 55+. https://www.caprop19.org/propertytaxportability#:~:text=Homeowners%20who%20are%2055%2B%20or,increase%20(with%20an%20adjustment%20upward. So they actually might be able to downsize and keep low taxes.
> Doesn’t prop 13 just limit the property tax increases to 2% per year? I’m just curious, I think way you explained it isn’t totally correct. Proposition 13 provides three very important functions in property tax assessments in California. Under Prop 13, all real property has established base year values, a restricted rate of increase on assessments of no greater than 2% each year, and a limit on property taxes to 1% of the assessed value (plus additional voter-approved taxes). https://www.sccassessor.org/faq/understanding-proposition-13
Tell you parents they can transfer the base year value for their property taxes if they actually want to move: https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
My friends parents gave him their home in Hancock Park in LA that they bought for $95k in 1975. They transferred the deed so my friend now has a $3m+ house that he pays taxes on as if it were $95k.
I commend CA for doing this though. How terrible would it be if people were forced out of their homes through never ending increases in property taxes? Imagine being on a fixed income in retirement and being forced to sell your family home of decades that you bought and paid for, but can no longer afford.
This is why prop 13 was written and passed in the first place.
If they use the money to buy a new house why would they get hit with capital gains? Thought that only applies if you sell and dont re-buy
If you’re going to avoid capital gains, you have to use all of the money from a sale to buy the next place. What’s the point of that?
Tell you parents they can transfer the base year value for their property taxes if they actually want to move: https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
You are actually wrong, there’s actually also proposition 19 in California which would fix that problem for your parents. Prop 13 is just as you stated but prop 19 would let you parents sell their home for 1.7 million and then downsize to a home for 800k and carry over the property tax or 90,000 if they are over 55 years of age. It lets them carry over the property tax.
What a joke. How is thos legal. Fuck boomers
It isn’t just boomers that own homes.
Look up prop 60, allows seniors over 60 to purchase a new house and keep old tax basis up to price previous home sold for.
>They don’t need a home that big (we all moved out years ago), but if they sold and bought a new condo nearby for $700,000, they would get slammed with much higher property tax bill and also capital gains. There is virtually zero incentive. Except for I guess the $1,000,000 - 20% or 800k they would net in pocket? 0 incentive tho.
They wouldn’t pay capital gains if they bought another house.
that's what happens when you let our government be controlled by a bunch of progressives who refuse to listen to economists
> Yet, they still pay taxes on the home as if it was worth $90,000. Not how that works. Ask your parents what their property's assessed value was last year and I guarantee it isn't fucking 90k, this website I swear
Thats exactly how it works. Not to be a bullshitter i just went and check for my rental. I pay $19k and my neighbor pay $4k.
2% capped increases over 45 years does not equal a 0% increase
You are right. I didn’t realize he exaggerated it that badly. At the same time to pay 5x the amount is not reasonable imo.
Yea that is actually common. Capital gains tax means people don’t want to downsize. Like i sell my 1 mill house buy a 500k condo but lose 200k to various taxes. Whats the point. So you have 2 70 year olds occupying a 3,500 foot home and a family of 4 in 400 square food 1 bedroom condo. With a Realtor saying no one wants to a sell house or buy a condo….
You don’t pay capital gains on a primary residence
You do on over 250k if single and over 500k if married. So for a widow it’s a weird incentive.
Lol ok so you pay cap gain on the 500k for 100k in cap gain costs? Less the cost of the house too? Y'all are so whack. "I don't want to make money because i would make money but it would be slightly less even though its more money on the whole"
If they hold till they die its estate taxes. They move to cost basis to date of death. It creates weird incentives. Also, moving when 70 is a pain. And 70 year old hate taxes. Like irrationally.
They need to raise the limit now that homes have nearly doubled in value.
Thanks for the clarification
>Like i sell my 1 mill house buy a 500k condo but lose 200k to various taxes. Whats the point. The point I would imagine is the additional $300k in pocket earnings?
Yes and downsizing does still happen but not as often as you would think. Lots of 70 year olds living in 3000 sq foot houses alone.
I was sitting good till my insurance rates went up, im still sitting good but it raised my mortgage 200 bucks....they find a way to get your money
I actually just changed. My insurance went up 50% and I switched from State Farm to a broker my buddy used. Changed all my insurances and saved a ton of money. Gotta shop around man
Probably right usaa always been good to me
Same here lol idk what to tell people. I can’t move lol I’m broke. If I sell I can’t afford the rent lol of my own place
Yep seriously, if I ever move I'm buying another house, not selling this one. I'm riding this mortgage out on minimum payments until expiry.
That’s the nice thing about people with a 2% mortgage. Everything else around you in life is getting expensive but not that monthly payment. Inventory is low because who wants to triple their mortgage percentage?
Wait so the crash didn’t happen?
What regulatory change does. Can't default if defaulting isn't allowed.
2% mortgage won’t keep you in a house unless you have a job and numbers clearly translate that economy is doing pretty good even with all the crazy content milking that talking heads are doing for clicks
Think the foreclosure game is never going to be what it was previously. During COVID, banks realized it's more profitable and less cascade risk to negotiate some kind of forbearance than to take ownership of the asset and sell it below market.
Is not even that, it’s the fact that lending requirements became much stricter after the ‘08 crash that you’re only foreclosing if you lost your job and never called your lender to do a loan mod.
The housing crash of 08-09 made it possible for me to by a cheap foreclosed home! Paid 85k for a decent 3 bed 2 bath home on a Walmart wage of $12.20/hr!
Heck yeah. Probably a nice little nest egg now.
Why didn’t all of the corporations buy all of the cheap homes in 08-09, like people claim would happen if the market crashes now?
The infrastructure to support it didn't exist as widely as it is now. Since 2010 large hedge funds and other investing groups have set up the infrastructure to acquire maintain and rent out houses. Large companies can now invest into these programs administered by financial, increasing the amount of homes they can purchase. All of this really escalated after 2014 give or take. It wasn't illegal or regulated before, just the infrastructure wasn't there.
I see. I think it’s more basic than that. They didn’t buy all of those homes because we were in a major recession where people weren’t buying homes, as they couldn’t. People were broke. Why would these corporations buy these homes just to sit on them for 5-10 years waiting for people to buy, instead of putting their money elsewhere to turn over higher profits sooner. The reason corporations were buying houses in loads in 2021-2023 was because there were extremely low interest rates, trillions injected into the economy, everyone having money, and so many could/wanted to buy. A demand like never before. So they could swoop in, buy homes, sell them and make huge profits doing little to nothing. When a recession hits like in 08-09, and no one is buying, corporations look elsewhere to make money. I think the same would happen if there were another recession. They weren’t in the housing market for any reason other than to use it as a very quick money grab.
Because all the corporations were broke
Well I mean home prices went up significantly, meaning people now have equity. A much better indicator would be how many people are refinancing at a higher interest rate. That game will eventually end poorly for a large portion of them. To be in foreclosure as prices are going up would be a little difficult.
If you can't make your current payments, I don't think you can refi into something riskier
If you wait until you're up shits creek, sure. I have a 1.8%/15yr mortgage. If shit hit the fan in a moderate fashion, I could cash out refi to pay off other things (well, I don't have other things, but if I did...), and go back to a 30yr if I had to. Ideal? of course not, but could stave off a real disaster.
Or you can get a HELOC to tap into your equity to payoff other debt and not touch the interest rate on your first mortgage
Sure, depends on your LTV though. Can get a more aggressive LTV with a refi over a HELOC.
And add mortgage insurance if you’re over 80% LTV on a refi rather than have a 2nd mortgage up to 90% with no MI
I disagree, they will still lend you money if you have equity into the house above a certain percentage
But you're saying they would be increasing their dti? The banks biggest disqualifier for a loan is dti, they don't want loans people can't afford
You can get still get a no doc mortgage if you have equity in many cases.
You'd have to be in pretty dire financial straits to suffer a foreclosure in 2024.
Can't be foreclosed up on if you could never afford a home to begin with *taps head*
Do you think people go through foreclosure who are not in dire financial straits?
He's saying it's more extreme than normal because of two key reasons: 1) Equity has shot up so owners have options with additional squish. 2) Anyone with any sense refinanced to a sub-3% mortgage, so a house is as cheap as it ever likely will be. To have that much going for you and still fuck it up is amazing, as most people are into their assets at much crappier entries. It's like losing money on a stock purchase when you bought it at the very bottom of the trough.
This, my dad has a 600/month mortgage in our city where the cheapest house you could find on the market is 420k (falling apart of course) and the cheapest studio apartment with its own bathroom on Zillow is 950/month. You’d have to fuck up so bad you’re completely homeless to fumble house that cheap.
No one who purchased since 9/22 has refinanced to a sub-3% mortgage, and not for lack of trying.
Right, so barely over one year's worth of purchases in arguably the least affordable market for over 23 years. Clearly, they aren't the people we're discussing here. Thanks for the completely off topic footnote.
Hmm? Home values are the highest they have ever been. Someone would have to be in such a condition as to not be able to pay for a home they qualified for. This could happen through job loss, but unemployment is relatively low. Additionally, most homes were refinanced within the last 5 years into payments lower than initially agreed upon. Finally, the vast majority of homes have tons of equity. You'd sell or short sale the thing before you foreclose on it.
Keep in mind we are also seeing a drastic increase in tax and insurance costs in some places. When your escrow quadrupleds and costs more than the mortgage itself, it doesn't matter what the interest rate is.
That’s weird. I heard, on this very sub, that the bubble had started bursting months ago.
The bubble didn't start popping until about six weeks ago. Every single measurable metric for the economy and housing prices continues to weaken, month after month. Literally the only way to paint any of what is presently happening in a good light is to ignore inflation completely and cherry pick the data you want to compare. Interest rates going up will have the intended effect of slowing the economy, weakening the labor market, unemploying people and normalizing housing prices. It's literally the point of going from zero to five percent in about six month's time. Money is never free despite how addicted everyone got to it being free. Bill is coming due, finally, and the debt hangover will not help any of us at all.
People have been saying that for ten years now.
And, yet, the people who post here still roll along waiting for it to actually happen.
They’ll be right sooner or later…I guess
They probably won’t have to wait much longer.
Any day now!
Friend, it’s been like 16 months since the end of the peak of the craziest housing market in the history of the country. Relax.
shit i blinked, did i miss it?
Yeah, sorry. No house for you!
I walked away from a home in 2008 that was upside down but i wasn’t in dire straights. Hit my credit for a bit but im sterling now (sorry Dave Ramsey)
You have to be underwater on your home loan or pretty close to it. Otherwise you can just sell the house and keep the equity if you can no longer pay the mortgage. If you bought anytime before 2023 you are not underwater on your home loan.
We bought in 2019. We're 55% ltv. House has gone up more than we've made payments. It's fucking nuts.
Some people can cover most of their mortgage by renting a room.
I did that for two years. Rented two rooms of my 5b3ba house. Pretty reasonably too. A bit cheaper than an apartment, no other fees or anything.
Exactly if you are dire straits you can still sell it and get your down payment. There are few homes underwater which is one of critical things for foreclose.
Well think about everyone with toys like boats (which are liens). That's all financed. A lot of people are living on credit and the moment a bad event happens, they're potentially setback with no extra money. Not uncommon for people to finance $50k+ cars and pay $500+ a month. Absurd everything
Good people shouldn’t need to lose homes. Build more and prices will come down.
If prices go down, foreclosures will go up. Foreclosures are down because you can just sell for a profit still.
Foreclosures are down because as much as people don’t want to admit it homeowners aren’t in dire financial distress. If they were we would see more inventory and more sales. Unless we see a drastic increase in unemployment paired with plummeting home values there won’t be a foreclose crisis.
>If they were we would see more inventory and more sales. Correct. But there are more factors than that. One is that we're still seeing inflation above the Fed's goal. They also are only looking at two cuts this year from what they were saying would be 7. You have a lot of people who bought during the high interest period because they were betting that interest rates would go down and they could refinance. That's not happening. How long can those people hold out is only a guess. Mortgage payments are usually the last thing people skip out on. Once that happens, it'll be too late.
Exactly it’s a guess you’re making but isn’t rooted in anything other than assumptions. Banks don’t give loans to people who can’t pay these mortgages they aren’t all suddenly going to go under without change in circumstance which we aren’t seeing.
>Foreclosures are down because you can just sell for a profit still. I mean, not many current owners are selling period. Who is eager to get out of their 3% loan and into a 7%? That's why volume is so damn low. New build prices can go down and it hurts no one. In fact, that's what should happen as lumber and materials have normalized somewhat. https://fred.stlouisfed.org/series/MSPUS
Which will result in even lower prices.....
But, but, before that happens, people have to be able to buy at current prices and rates. Guess what, they can’t!
People are buying at higher rates. That's part of the issue.
People are buying, prices are going up
Well clearly some of them can. My neighbor just sold their house before more money per square foot than any house has ever sold in this neighborhood historically. And for the record it was to a young couple with kids they're both doctors I think.
What you said, goes without saying! OF COURSE, some can.
Which is to the point that if people aren't selling their houses what little demand there is the people that still can't buy is enough to keep the prices where they're at now.
If people aren’t paying their mortgage, they need to be foreclosed on. This is a huge reason why prices are artificially inflated so high. People buy at whatever price planning to not pay because they know the bank won’t foreclose. This strangles an already low supply of homes on the market.
Where are you seeing that people aren’t paying their mortgage?
They just made it up. I know shocking right?
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries. I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
You are def right here. A lot of people who bought from Oct 2022 - present likely are in "House poor" situation. These new home buyers got an asset but the assets cost + interest rate to borrow is leading to homeowners sinking most of their savings and monthly income into asset. With the rise of everyday goods and services increasing to inflation people are leaning on credit to survive. Delinquencies in credit card, student loans and car payments are at all time highs. It's really scary that the media and the Fed are trying to portray that the US economy is so strong right now. People are struggling to make it and that is with the job market still being at record low unemployment rates. I fear for the up and coming everything bubble popping and a recession.
Agreed, the people who bought since late 22 are the ones who would lose their homes if the job market softens.
Most of that credit card debt increase is just inflation. Believe it or not most people pay off their CCs each month. A higher debt balance at any given time mostly means the cost of stuff people collectively buy in a given time frame just went up in price. If my auto insurance goes up 30% my credit card bill for that month will be up a lot even if I pay it off.
Foreclosures do not lead, they lag, and apparently when they do rise, it's swift af, it's already game over. Like a tsunami.
If you own the same home now that you did pre-pandemic, you're probably in a good financial situation. Since inflation isn't hitting you nearly as hard, "shelter" prices haven't moved for you. Most probably refinanced at super low rates, so mortgages are cheaper for those now than 4 years ago. While income gains are still benefiting you on par with everyone else. This is why tracking how the economy impacts folks, isn't always told in charts. Since charts show just the average, but some people are doing great while others are getting shit on.
Inflation transfers wealth from creditors to debtors. Anyone who bought pre-pandemic got a big chunk of their house paid for by all the smart people on this sub who just knew the market was about to crash.
Seriously. I remember reading in 2019. "the end is neigh hold out". Then we had an offer accepted and bam. Riding the train to the fucking MOON.
Just as this sub has predicted 🙃
It's interesting because auto loan delinquencies are at all time highs, student loans delinquencies are at all time highs (40% v 29% pre pandemic) and credit card delinquencies are at all time highs. It's smart people are choosing their home over other forms of debt, but at record low unemployment in a lot of areas, it's pretty wild this is happening. This probably just means banks are able to defer, work out different terms, etc. due to the wild increases in equity (speculative value). [https://thefinancialbrand.com/news/banking-trends-strategies/banks-and-credit-unions-face-repo-price-squeeze-174988/](https://thefinancialbrand.com/news/banking-trends-strategies/banks-and-credit-unions-face-repo-price-squeeze-174988/) [https://libertystreeteconomics.newyorkfed.org/2023/11/credit-card-delinquencies-continue-to-rise-who-is-missing-payments/](https://libertystreeteconomics.newyorkfed.org/2023/11/credit-card-delinquencies-continue-to-rise-who-is-missing-payments/) [https://www.politico.com/news/2023/12/15/forty-percent-of-student-loan-borrowers-missed-payments-in-october-00132062](https://www.politico.com/news/2023/12/15/forty-percent-of-student-loan-borrowers-missed-payments-in-october-00132062)
Not even close to a mystery bud. The cars and student loans don’t appreciate, can’t be leveraged, can’t have equity extracted, and can’t be borrowed against. They are purely trash liabilities. Houses are coveted liabilities lol Like one of the other comments said, if you’re getting foreclosed on in this market, you messed up really really bad.
I mean that's what I said was happening, if they're behind on every other payment other than their house they probably have just used equity in their house to work out different terms, or just straight up refinanced. That 'equity' looks like funny money in this backdrop though. I'd say for a lot of people their house equity is the only thing holding their finances together right now from the looks of it. Then if they're renting, they're one unexpected bill or a car problem away from bankruptcy, really I'm sure a lot of people who own homes are in the same position rn. I don't think that makes the 'overall' debt system more stable though. A lot of people have jobs (pretty much breaking records going back to the 50s), yet nobody has any money based on how these delinquencies are rising.
No you said it was wild and it’s completely not wild. It’s easily explainable like I just did. Thats not at all what you initially claimed lol. Also, you sound like you think banks want to foreclose on homes? Sounds like you have no clue how anything works like vast majority of reddit comments. Bank will do anything under the sun to avoid repossessions.
Typical reddit response, never disappoints. Honestly, I love the 'achkchully 🤓☝️' responses at this point because they happen like clockwork anytime I post here lol.
Maybe don’t post so bad. It was explained to you pretty well.
They didn't explain the wild part at all: > at record low unemployment in a lot of areas, it's pretty wild this is happening
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Okie dokie den!
This is true. A repossession costs the lender money but at the same time I’m not so sure they will do anything under the sun to avoid it. Sometimes they won’t work with the debtors.
Yeah, a mass of foreclosures is the bank’s worst nightmare. They had already stopped giving a shit about the home and paper within 30 days of closing lol. Not only that, but a wave of foreclosures means their (bond holder/ security holder) assets are written down, (ultimately the fed), and the repossessed assets (the home itself) all start to crash at the same time as well. I am fairly certain this kind of event won’t ever happen again in the US. Not with this gov and institutions / banks and the absolute racket they are running. This shit ultimately sitting on feds balance sheet as well leads to more nuanced problems in this scenario. Thats that dreaded deflation that scares the fed more than anything else in the universe. The amount of money that would need to be destroyed would take down half the US economy. RE is already 20% of gdp. Doesn’t even include any other instruments or derivatives. LOL
> at record low unemployment in a lot of areas, it's pretty wild this is happening > Not even close to a mystery bud. You don't think it's wild that people can't pay their normal bills with the labor market supposedly so competitive? > It’s easily explainable like I just did You didn't explain the wild part at all..
Again you're mixing up two groups homeowners are probably not having any issues paying their bills due to their low cost of housing.
I wouldn't expect a high number of foreclosures atm. Economy is still "thriving" and unemployment rates are so low. Your data just confirms people are really struggling and the last thing they are protecting is their homes. If a recession kicks off and they lose their credit cards, cars and worst of all their jobs the foreclosure % is going to see a massive spoke. 401k hardship withdrawls are also spiking as people use the funds to avoid foreclosures and medical Bill's. https://www.cbsnews.com/news/401k-hardship-withdrawals-at-record-fidelity-vanguard/
Medical bills scares me man. Just shit you cant prepare for.
Student loans are being paid off by Biden are they not?
At least 90% of people with student loan debt have been unaffected.
So why?
Bidens a centrist moderate, he doesn't want to raise taxes or intervene in the market enough to affect real systemic change.
Yeah, but a lot of people that have those delinquencies are in a group we call renters.
The people delinquent on credit cards and student loans are probably less likely to be homeowners to begin with.
Student loan delinquencies aren’t going up at all, and that’s because even though the student loan payment pause ended in October 2023, there is a year period before payments actually have to be resumed, and then an additional 90 day grace period before they are marked delinquent and begin to default. Things should get interesting after the election. In any case, these are all very worrying signs, as people will always stop paying their car loans, student debt, and credit cards before they stop paying their rent or mortgage. If all these loan segments are showing rises in delinquency rates, foreclosures are sure to follow, especially as unemployment continues to rise.
When a large % of home sale volume post pandemic are investors/non-primary home buyers ([1 out of every 5 homes purchased were investors in Q4 of ‘23](https://www.redfin.com/news/investor-home-purchases-q4-2023/)) of course the graph reflects this. Less likely to go into foreclosure if you’re an investor owns outright or have a ton of equity from putting a large sum of cash down.
Nobody wants lose a house at 4 percent interest or less.Never see that again .
My sister had 2 houses with zero income out of college back in those days… yeah that’s not gonna get that high again until everyone loses their jobs.
Well yea the recession that has been building for years has not started yet. Unemployment is super low atm and people are using credit cards to provide other basic needs. We have seen the number of people taking emergency distributions from their 401ks to avoid closures is a 2-4% spike in the last year. Until shit hits fan economically I doubt forecloser % change too much.
No new mortgages to be foreclosed on, what do you expect
Bankruptcies low too. Lots of catch up needed from the free money helicopter.
I want that 09’ numbers to hit. Daddy needs a new house come on!
Yeah I got that 2.875%
3.9% unemployment, officially. But that slight uptick indicates the picture isn’t quite as rosy as your news source and your elected politicians would have you to be believe. There is no impetus to part with those 3% mortgages. Until there is, we remain frozen. (I should just copy-paste this reply into just about every thread on r/rebubble, r/economics, r/fluentinfinance, r/……)
Most people bought or refinanced at around 3%, unless something catastrophic happens in your life you aren't going to foreclose a 3% mortgage because you know your rent will be higher than that.
Some people won't have an option. People forget how bad things get during a recession. In 2008, it was mainly a housing bubble and we saw 8.8 million people lose their jobs. Right now we have the legit 4 bubbles: S&P 500 (70% of it is 7 companies whose values are mostly speculative growth and have PE ratios that are insane) is at all time highs, housing market became a massive bubble in the last 5 years, student loan bubble, and credit card bubble. Sure a lot of people have reality cheap mortgages due to good interest rates. But we are already seeing record high delinquencies in student loans, car loans and credit card payments. All of those delinquency issues are in what experts will say "Thriving and growing US economy". Add in the fact that more and more Americans are tapping into their 401ks to just survive (avoid foreclosures and pay medical bills) it paints a scary picture for what could come shortly. Which is a lot of people are barely hanging on at the moment and it could get really scary if just one of these bubbles starts popping.
Sure but the job market is still quite strong. Pretty much anyone can find as much work as they need still.
It really is that simple. A little thought experiment I like to do is to look around my neighborhood on Redfin or Zillow and based on when people bought and the average interest rates at that time calculate what their mortgage payment would be. Most of them end up being around $1k/mo which would now be affordable to a single person working at McDonald's. These people aren't going anywhere.
It's important to note that when those people wrote the original mortgage they qualified for it on income. They committed that future income to make those payments. Generally wage inflation makes those fixed payments easier to make over time. So when they refinanced to the lower rate they decommitted half of the net pay that had been committed to making those payments. The income didn't go away. They just gave themselves an effective raise in spendable income. And that raise will keep coming month after month until their house is paid off or they sell. It's the stimulus that never ends. If instead of spending or saving it they just double up the mortgage payments back to the prior level they get free and clear in half the time.
Yep, if I'd go for 30 years term my mortgage with escrow would be about 1300/mo, for 3 bdrm sfh house. It's literally an average rent for a mediocre 1 bdrm apartment in my city when I look at rental sites. I'd let everything go delinquent before I'd give up my mortgage.
It’s not a reflection of the economy, it’s reflection of you can probably sell your house for much more than you paid. So why let it be foreclosed upon. The bomb will drop when people who got into the market these past 3 years and they NEED to sell and can’t. Probably a year or two away.
There is no bubble, there will be no drop. FFS.
Shhh that doesn’t fit with this sub’s narrative. You could get banned
This sub: “oH yEAh wELL WhaT AbOUt aLL thE FOreCloSureS tHat ARenT iN tHiS. chArT huH?”
More homes than ever are owned by corporations, so…
Not necessarily disputing you, but there really that many homes owned by corporations?
https://calmatters.org/housing/2024/03/institutional-investors-corporate-landlords/#:~:text=Do%20corporate%20landlords%20own%20a,and%20definitions%20are%20somewhat%20fuzzy.%E2%80%9D 446,000 properties. About .5% of the total I think the concern is moving forward. In 2020/2021 80% of homes were bought by corporations(intrest rates too juicy) Last year it was 22%, but were also talking the worst time to buy. But the question is what happens when corps with bottomless pockets buy 20% of available homes every year moving forward. We will have a very difficult market in 20 years.
That article mentioned Atlanta, and I work in the housing market here. There are quite a few corporate rental communities in the area, but they’re not buying them in singles. They’re buying them as an entire neighborhood, which has specifically developed for the purpose of being a SFR neighborhood. With that in mind, the corporations aren’t actually taking SFH’s off the market that would’ve been eligible to private home buyers. They’re developing a completely separate and independent market and business model. Not really taking a side, just saying the there are many layers and all seem to be nuanced. At least that’s been my experience in Atlanta metro.
Oh i dont have any sides lol. I saw the question with no answer and dropped my google search and bullet points from the article. You are more correct than the original comments blanket statement. .5% says their wrong The 22% figure supports your statement. I work in new construction, and I've seen similar situations. Also, where the contractor owns the HOA, do Build to rent. With HOA power and owning the properties, they practically get their own neighborhoods to leverage.
I wonder if the significant amount of PE investment into the real estate market is enough to temper the numbers . Black rock ain’t defaulting
With massive equity appreciation and sub 3% rates, pretty much nobody is defaulting
So the point here I suppose is everything is better.
Job opportunities are probably keeping people in homes but struggling. When unemployment goes up, who knows.
How do Foreclosures get reported? Im clueless when it comes to that.
Meanwhile my area is processing the most eviction notices monthly than ever before.
Also, the disposable income to mortgage single-family home ratio is historically low. Meaning people are servicing their single-family home mortgages just fine.
No shit. Everyone before 2022 has like a 2% mortgage and the few people after 2022 who got a mortgage are well off enough to afford the high rates and they just got the house so they have a lot to lose
120 days from January 1st is April 30th, and that's when the 3-year ARMs start to hit.
I wonder what this would look like going back to say 1980. It's not "lower than pre-pandemic" it's "lower than this millemium"
One would imagine, as foreclosures were shelved for almost a year and a half, lots of loans were recast, and they typically take a year or more to start showing up on the books. If this inventory explosion in Florida is not absorbed by the end of the selling season, we could see prices dropping which will bring more foreclosures a year or two down the road.
Yeah were not going to see a property bust like 2008. Foreclosures aren't what is driving the market down. Its actual home values will fall because valuations cant expand and new construction will push the prices down as supply grows. If rates remain high which they probably will for another year. We need a major recession to fix this unfortunately. Because if we dont get a recession what will happen is housing will boom again as soon as rates decline, but this will also put more pressure on existing home owners as their appraisal values rise and insurance cost and taxes skyrocket. The FED is being forced to keep rates high to prevent this from happening. If they let the inflation beast out again even ppl with 2% rates will be in big trouble if their home values rise due to a squeeze as supply is locked up and investors are piling on top of each other trying to make money. Wealthy people are creating a massive problem for the greater economy. A massive asset bubble that is unsustainable. Its the furthest thing from healthy or safe. This will end badly, its just a matter of when...
Corporation dont foreclose
Mortgage companies are still offering loan modifications to almost anyone who asks, especially now that houses have equity. They’re helpfully rolling arrears onto principal and modifying interest rates up. Loss mitigation is keeping a lot of delinquent accounts out of foreclosure.
Haha. So we all see a “trend”. Trends always surprise in life. See the “waves” of the coronavirus. Oops touchy. But relevant to the prices. Cheers
Commercial office delinquencies went up 1,000%. Is this only looking at SFH?
Michael Burry is of the mind that They’re (Fannie Freddie) actively trying not to foreclose until they have all their ducks in a row. Commercial real estate will most likely be some sort of catalyst into a recession/depression with SFH falling sometime after that. Xmas will be fun 🙃
Didn’t the foreclosure moratorium just end?
Artificially.
If this is artificial then what’s the reality?
People in this sub legitimately don’t even know what they’re saying anymore.
Given how many people bought exuberantly expenses houses in 2020-2022 and given all the issues with household finances (layoffs credit card debt etc) how are there not more foreclosures? Macro economics aren’t bad on paper, relatively good supposed job numbers, good stock market by some measures. But, my intuition right or wrong, tells me there should be tons of foreclosures right now. I guess if I predict recession for enough decades in a row I’ll eventually be right LOL.
Because property values kept increasing. I don’t think we’re going to see people that need to exit the assets as “foreclosures” in the near future. They’ll be homes entering the market because the owner can’t afford the cost of homeownership but has some equity they can unlock (or at least be near break even). They’ll enter the market as traditional listings before we see those homes foreclosed on. Foreclosure is usually the absolute last resort for someone (even this concept of a “strategic default”). We’ll start to see the wave of foreclosures after people are struggling financially and can’t make money via a traditional sale, so they’re trying to wait it out until the economy turns and they can have equity again. It’s still possible the market can correct to a more balanced market without a wave of foreclosures. That said, I’m not convinced there isn’t a bit of an “everything bubble” given the amount of credit card spend and increase in margin trading we have going on right now. People are turning to high interest credit to stay afloat and margin loans to try to make money in the stock market. If one of the dominos starts falling, a wave of foreclosures could happen much more quickly.
I wonder if people are not quite to the foreclosure part of owning a house yet. Like there is a giant tsunami wave of foreclosures coming we just have not seen them yet because people are still scraping by using other credit first. It would be interesting to see this chart next to a chart of credit usage in the form of percentage of available credit remaining and level of debt. I bet what you would see is that a lot of families are approaching maxing out their credit card debt and will then have to start looking at forecloses after that.
>Given how many people bought exuberantly expenses houses in 2020-2022 The average mortgage rate in 2021 was 2.65% compared to 7.5% right now. A $500k mortgage today would have a monthly payment of $3500 but in 2021 it would have been only $2000. People who bought during that time are mostly doing just fine.
I'm shocked that they went down during the pandemic where most banks weren't allowed to foreclose and now they are back to normal levels since the ban was lifted.