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Foreclosures Jump 16% in February. Will More Distressed Properties Hit the Market?

animelover

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Mar 12, 2021 by Aly J. Yale



Despite all the foreclosure protections and other COVID-19-related relief measures for homeowners, it appears foreclosures are actually on the rise in recent weeks. According to a new report from ATTOM Data Solutions, foreclosures jumped 16% between January and February, and in 29 states, they're trending upward.

If you're a home flipper or rental property investor, it might seem like a glimmer of hope -- especially if distressed properties are your typical go-to purchase. But is it actually reason for optimism just yet? Let's dive in.

What the data says
Foreclosures are definitely up. In February, one in every 12,182 properties went into foreclosure, up 16% over January. Additionally, foreclosure completions were up 8%.

Foreclosure starts also increased in more than half of U.S. states, with the highest foreclosure rates in Utah, Delaware, Florida, Illinois, and Louisiana. (Utah saw one in every 3,883 housing units foreclose last month.)

The news is likely surprising, what with foreclosure moratoriums, mortgage forbearance, and other pandemic relief efforts still in place. But according to Rick Sharga -- executive vice president of RealtyTrac -- not all properties are subject to these measures.

"The government's moratorium bans foreclosures on government-backed loans for homeowners, and borrowers in the forbearance program are also protected from foreclosure actions," Sharga said. "But loans on commercial properties, investment properties, and properties that are vacant and abandoned do not always have the same protections. This could be why we're seeing a slight increase in foreclosure starts despite the government programs."

Reasons for caution
If you typically look to distressed properties to expand your investment portfolio, the upward trend likely gives you hope. But don't get too excited just yet.

The increases noted by ATTOM are just monthly ones, and when you look at the data over the year, foreclosures are still down significantly from their pre-pandemic days.

Between February 2019 and February 2020, foreclosures have dropped 77%, and foreclosure completions fell 85%.

What that means is that while foreclosures may be trending upward, it doesn't necessarily indicate that distressed properties will be widely available anytime soon. Until moratoriums and other COVID-19 protections expire, the supply of these properties will likely remain low.

To top things off, the few properties that do hit the market will see high demand. According to recent data from Auction.com, foreclosures are currently selling at their highest price-to-market-value ratio since January 2014, and bids per property? They're at an all-time high.

What you can do
If you are seeking out these properties, your best bet is an online bidding app, which allows you to bid on properties across the country no matter where you're located. You should also opt for cash offers when you can, or, if that's not possible, have a preapproval in hand before submitting your bid. You can also try these five alternative options for investing.



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Foreclosures Jump 16% in February. Will More Distressed Properties Hit the Market?
 

B. Leigh

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Its weird that there is a housing boom and crisis happening at the same time...

My grandmother's house (who recently died) sold in a week for more than it was on sale for and we live in the midwest where it usually takes a lot longer to sell...

Its just weird that so many ppl want to buy at the same time ppl are losing their property...just odd...
 

TERRASTAR18

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Its weird that there is a housing boom and crisis happening at the same time...

My grandmother's house (who recently died) sold in a week for more than it was on sale for and we live in the midwest where it usually takes a lot longer to sell...

Its just weird that so many ppl want to buy at the same time ppl are losing their property...just odd...
wealth disparity
 

lively

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I think a lot of developers are going to convert commercial properties into residences as companies see people can work from home. Plus there will continue to be retail closings. I wouldn't buy up real estate until everything settles from this pandemic.
 

B. Leigh

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wealth disparity
But its a wealth disparity from ppl who are usually in the same wealth bracket...meaning middle class ppl are losing their property while other middle class ppl are overpaying for homes in shorter periods...I think its because ppl who owned their own business took a major hit but if you worked for a large corporation or the government you are ok...
 

bullish af

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Its weird that there is a housing boom and crisis happening at the same time...

My grandmother's house (who recently died) sold in a week for more than it was on sale for and we live in the midwest where it usually takes a lot longer to sell...

Its just weird that so many ppl want to buy at the same time ppl are losing their property...just odd...

There’s limited inventory right now. There’s not a lot of incentive to sell right now. I think I read that 2020 was the lowest housing inventory in 40 years.
 

lejhern17

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My husband and I were looking, but houses were being swept up fast! We're on pause to regroup, but we're going to keep our eyes open.

I read an article that said some new homeowners are already having buyers remorse. Due to the housing market some people are overbidding for houses, and others are foregoing important steps, like inspections, in order to win bids for houses.

The overbidding lead to buying houses they really couldn't afford, and the lack of inspections became costly.

The article didn't give a number, but I wonder in the next few years if we will see more people with buyers remorse.
 

B. Leigh

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My husband and I were looking, but houses were being swept up fast! We're on pause to regroup, but we're going to keep our eyes open.

I read an article that said some new homeowners are already having buyers remorse. Due to the housing market some people are overbidding for houses, and others are foregoing important steps, like inspections, in order to win bids for houses.

The overbidding lead to buying houses they really couldn't afford, and the lack of inspections became costly.

The article didn't give a number, but I wonder in the next few years if we will see more people with buyers remorse.
I think ppl will have buyers remorse...we were shocked what my grandmother's house went for...I honestly think its a bubble that is going to pop once more ppl put their homes up for sale...
 

Arrcadiaa

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But its a wealth disparity from ppl who are usually in the same wealth bracket...meaning middle class ppl are losing their property while other middle class ppl are overpaying for homes in shorter periods...I think its because ppl who owned their own business took a major hit but if you worked for a large corporation or the government you are ok...

My partner's bestfriend sold his house for 500k+. A super basic ass house that doesn't even have a 4 bedrooms but 3. It's ridiculous
 

lejhern17

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I think ppl will have buyers remorse...we were shocked what my grandmother's house went for...I honestly think its a bubble that is going to pop once more ppl put their homes up for sale...

Our friends just bought a house, and the sellers were asking for $40,000 more than the homes actual value. Our friends refused to pay that much so they got it for what it's actually worth.

We were told that we could get $30,000 more than we thought for our townhome, but we also did some remodeling (which included adding another bathroom). When we're ready to sell we'll see what happens.
 

B. Leigh

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Our friends just bought a house, and the sellers were asking for $40,000 more than the homes actual value. Our friends refused to pay that much so they got it for what it's actually worth.

We were told that we could get $30,000 more than we thought for our townhome, but we also did some remodeling (which included adding another bathroom). When we're ready to sell we'll see what happens.
My father and his siblings didn't put the house up for what the real estate agent said it would sell for because they didn't believe it and wanted the house to sell quickly...there was actually a bidding war...this almost never happens where we live...I am still shocked....
 

Amanirenas

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Yes. The market is on fire right now. Foreclosures will increase because a lot of businesses are not coming back after Covid is under control. If you can buy a home now, do so.
 

Clara Barton

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Its weird that there is a housing boom and crisis happening at the same time...

My grandmother's house (who recently died) sold in a week for more than it was on sale for and we live in the midwest where it usually takes a lot longer to sell...

Its just weird that so many ppl want to buy at the same time ppl are losing their property...just odd...

This is why I am nervous to buy.

My parents keep encouraging me, but I don't want to pressure buy a property that can be tangled in this COVID mess.

I wanted to make a thread asking if it was a good idea to consider house buying now.
 

SuccessfullyMe

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My husband and I were looking, but houses were being swept up fast! We're on pause to regroup, but we're going to keep our eyes open.

I read an article that said some new homeowners are already having buyers remorse. Due to the housing market some people are overbidding for houses, and others are foregoing important steps, like inspections, in order to win bids for houses.

The overbidding lead to buying houses they really couldn't afford, and the lack of inspections became costly.

The article didn't give a number, but I wonder in the next few years if we will see more people with buyers remorse
.

This is going to be a huge issue. People are buying houses that appraise for way less and have issues for more than it's worth. You gotta put money into the house to get it up to code or make it livable because some of the issues being seen are not small issues ... so that's maybe another 10k to 20k if you are lucky and this isn't even your forever home.

People are also moving to cities they never lived in or haven't lived in for numerous years because it's cheaper. Now they are stuck with a house in a city they don't even like ... in NYC upstate NY in areas like Beacon are becoming expensive because people want to be near NYC since they can't afford NYC.
 

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