Inflation is really starting to show its ugly face in the latest housing numbers from ATTOM Data Solutions and CNBC. Home foreclosure activity surged in the last few months and is 153% higher than last year at this time. MyEListing reports that almost 15% of all renters are behind on their rent payments. There appears to be considerable trouble brewing in the housing market.
Inflation has really hit housing process over the last couple of years. Federal government programs kept many tenants in homes for a couple of years without paying a single dollar. For homeowners, many mortgage lenders allowed homeowners to forego mortgage payments for an extended period of time.
With the expiration of COVID-19 government programs and the eviction ban, many consumers are now falling behind on their rent payments and homeowners cannot afford their mortgage payments. Millions cannot simply afford their house payment.
Rental Delinquencies
Almost six million tenants are now behind on their rent payments. How did that happen? Landlords could not evict tenants during COVID. In addition, many tenants did not have to make rent payments as part of the federal government’s COVID relief package. It wasn’t until this last May (2022) that that relief expired and tenants had to make their own rent payments.
Mortgage Foreclosures
This is a big concern going forward. Foreclosures have been below historical averages through the COVID period. However, with homebuyers stepping to the side because of high prices and high interest rates, more and more foreclosures are starting to appear. Some think we will face a surge in foreclosures in 2023. This could get really ugly for many. It could also create opportunities for future homebuyers.
The housing market is under a lot of strain. The next three to six months will provide a clearer picture of the housing market for the next two to three years.