May 14th, 2020 by AHB
A crashing market is great for buyers who are eagerly waiting to chomp into their next home at a fantastic price. But it’s not so great for sellers who are left unable to sell at prices that let them break even with what they bought for. Seems to be a chicken vs egg question.
It’s a crushing feeling when you find the value of your house is less than what you paid for it. Even if you never took out a home equity loan, made payments as usual, and have a very valid reason to sell like a death in the family, loss of a job, etc.
Mortgage delinquencies will continue to rise over the next six to 12 months as home prices decline and economic conditions remain difficult, according to one forecast released Monday.
The Core Mortgage Risk Monitor (CMRM), an index of foreclosure risk compiled by real estate data analyzer First American CoreLogic, increased 16% compared with the same period last year.
CoreLogic analyzes house price trends, foreclosure rates, economic health factors and fraud propensity to predict the chances that future mortgage delinquencies will occur.
The index, which has increased over the last four quarterly reporting periods, is now 47% higher than it was in the first quarter of 2002 when the last recession was winding down.
Nationwide, the markets with highest levels of delinquency risk also had double-digit declines in home prices and weakening labor markets.
“House price depreciation factors are now outweighing economic stress factors,” said Mark Fleming, CoreLogic’s chief economist.
“High house price markets are now high risk markets,” said Fleming.
Falling home prices have created a vicious cycle: Lower prices lead to more defaults, resulting in excess inventory, which causes demand to fall, bringing home prices even lower, leading to more defaults.
This downward cycle puts pressure on the broader economy, with declining home prices impacting personal wealth and consumer confidence.
Check Out Some Related Posts
No comments yet.
Sorry, the comment form is closed at this time.