Mortgage Forbearance

[usctrojancpa]

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.

Use the same monthly numbers for renters. Do you think they will pay back the landlord that are Individual RE owners or apartment complex owners? 

The kicker if they keep on extend the forbearance another 6.  Then the numbers that is owed to the bank is $30k and $45k respectively. (Using the $2k and $3k payment a month scenario)

So if they don?t pay it back the individual RE investor or Apartment can take them to court. What is the likely hood for them to collect.

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.


As a part of Forbearance program, are they not simply going to extend the life of a loan? There is no way someone who cant pay mortgage of 2K a month can all of sudden start paying 3000 a month once this forbearance is over. 

Maybe SGIP can enlighten us on this subject that how it is going to work.

There is no written law on how this will be handled. It is completely up to the lenders. Some of them may ask for the entire amount up front, some may extend the life of the loan, some may require you to pay it within a given time frame, etc. Its completely up to the lender. And because of this, I think it will be interesting to see if there will be any laws that tells lenders how to handle forbearances once forbearances are lifted. Otherwise you'll have to see what the majority of the banks ends up doing with forbearances to see how the housing market will be impacted.

As for the point made before on the fact that foreclosures will happen, that may be true but they will be selling when the market was up 20%+. To be frank, its quite BS that homeowners get to be bailed out by the government. I'm not sure if landlords would look at foreclosures and reject a candidate because they had a foreclosure. But I sure know landlords that will reject tenants that have been evicted before. So if there were to be government support, it would make more sense to help the renters, not so much the homeowners. Maybe I'm bias because I got the short end of the stick when buying my first home, but it is quite frustrating seeing how housing could have dropped significantly if the government did not interfere.

If I had to guess what caused the real estate market to get out of balance more it would be the significant drop in interest rates and the mortgage forbearance program to a lesser extent. You can blame the Fed bond purchasing program for that. Biggest reason why many of my buyers started coming back into the market in April/May was due to 1) drop in rates and 2) looking to upgrade/get out of an apartment and 3) home prices stabilized.

 

[sleepy5136]

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.

Use the same monthly numbers for renters. Do you think they will pay back the landlord that are Individual RE owners or apartment complex owners? 

The kicker if they keep on extend the forbearance another 6.  Then the numbers that is owed to the bank is $30k and $45k respectively. (Using the $2k and $3k payment a month scenario)

So if they don?t pay it back the individual RE investor or Apartment can take them to court. What is the likely hood for them to collect.

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.


As a part of Forbearance program, are they not simply going to extend the life of a loan? There is no way someone who cant pay mortgage of 2K a month can all of sudden start paying 3000 a month once this forbearance is over. 

Maybe SGIP can enlighten us on this subject that how it is going to work.

There is no written law on how this will be handled. It is completely up to the lenders. Some of them may ask for the entire amount up front, some may extend the life of the loan, some may require you to pay it within a given time frame, etc. Its completely up to the lender. And because of this, I think it will be interesting to see if there will be any laws that tells lenders how to handle forbearances once forbearances are lifted. Otherwise you'll have to see what the majority of the banks ends up doing with forbearances to see how the housing market will be impacted.

As for the point made before on the fact that foreclosures will happen, that may be true but they will be selling when the market was up 20%+. To be frank, its quite BS that homeowners get to be bailed out by the government. I'm not sure if landlords would look at foreclosures and reject a candidate because they had a foreclosure. But I sure know landlords that will reject tenants that have been evicted before. So if there were to be government support, it would make more sense to help the renters, not so much the homeowners. Maybe I'm bias because I got the short end of the stick when buying my first home, but it is quite frustrating seeing how housing could have dropped significantly if the government did not interfere.

If I had to guess what caused the real estate market to get out of balance more it would be the significant drop in interest rates and the mortgage forbearance program to a lesser extent. You can blame the Fed bond purchasing program for that. Biggest reason why many of my buyers started coming back into the market in April/May was due to 1) drop in rates and 2) looking to upgrade/get out of an apartment and 3) home prices stabilized.

I have questions for you assuming mortgage forbearances did not exist:

1. Would you have the same influx of buyers?
2. Do you think the inventory levels will be the same as it is currently or in the past six months?
3. Do you think that homes would jump up 20%+ in pricing in the span of 8 months?

My answer to all those questions is no. For one, there was a brief period right when lockdowns happened where people held off on buying homes because they did not know how the situation will unfold. Because the Fed came in and introduced mortgage forbearance, people are now chilling in their homes not needing to pay their mortgage for up to a year. This by itself has limited the amount of supply of homes in market. If they did not have mortgage forbearance, people would have had to sell their properties because they may not have the emergency funding that is needed to handle a sudden unemployment or any covid related emergencies. And with more supply in the market, homes would not have gone up 20%+. So with what has happened now, because ones home went up 20%+ and their stocks basically doubled or tripled, of course they can go out and buy a bigger/newer property. But what if their properties did not go up 20% and stocks were down?

Your three reasons are valid only because the fact the Fed bailed out the stock and real estate market which allowed the influx of buyers to come into the picture. Otherwise if forbearances were not a thing, you would definitely see more supply in the market and buyers may not even touch housing even with lower rates. I can somewhat understand the need to calm the financial markets as there are people that depend on that for retirement and it would be devastating if it was not settled. On the otherhand, homes did not necessarily need to be bailed out. If you can't afford a home anymore, you sell it and you go rent. A home is not necessarily needed but your pension/retirement funds are. Hence, I'm specifically questioning whether or not mortgage forbearance was really needed as it caused the entire real estate market to go crazy. To the point where you need to overbid by 30k+ and sometimes 100k+ in bay area in addition to waiving contingencies. This is a ridiculous market and could have completely be avoided if mortgage forbearance wasn't a thing.

 

[usctrojancpa]

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.

Use the same monthly numbers for renters. Do you think they will pay back the landlord that are Individual RE owners or apartment complex owners? 

The kicker if they keep on extend the forbearance another 6.  Then the numbers that is owed to the bank is $30k and $45k respectively. (Using the $2k and $3k payment a month scenario)

So if they don?t pay it back the individual RE investor or Apartment can take them to court. What is the likely hood for them to collect.

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.


As a part of Forbearance program, are they not simply going to extend the life of a loan? There is no way someone who cant pay mortgage of 2K a month can all of sudden start paying 3000 a month once this forbearance is over. 

Maybe SGIP can enlighten us on this subject that how it is going to work.

There is no written law on how this will be handled. It is completely up to the lenders. Some of them may ask for the entire amount up front, some may extend the life of the loan, some may require you to pay it within a given time frame, etc. Its completely up to the lender. And because of this, I think it will be interesting to see if there will be any laws that tells lenders how to handle forbearances once forbearances are lifted. Otherwise you'll have to see what the majority of the banks ends up doing with forbearances to see how the housing market will be impacted.

As for the point made before on the fact that foreclosures will happen, that may be true but they will be selling when the market was up 20%+. To be frank, its quite BS that homeowners get to be bailed out by the government. I'm not sure if landlords would look at foreclosures and reject a candidate because they had a foreclosure. But I sure know landlords that will reject tenants that have been evicted before. So if there were to be government support, it would make more sense to help the renters, not so much the homeowners. Maybe I'm bias because I got the short end of the stick when buying my first home, but it is quite frustrating seeing how housing could have dropped significantly if the government did not interfere.

If I had to guess what caused the real estate market to get out of balance more it would be the significant drop in interest rates and the mortgage forbearance program to a lesser extent. You can blame the Fed bond purchasing program for that. Biggest reason why many of my buyers started coming back into the market in April/May was due to 1) drop in rates and 2) looking to upgrade/get out of an apartment and 3) home prices stabilized.

I have questions for you assuming mortgage forbearances did not exist:

1. Would you have the same influx of buyers?
2. Do you think the inventory levels will be the same as it is currently or in the past six months?
3. Do you think that homes would jump up 20%+ in pricing in the span of 8 months?

My answer to all those questions is no. For one, there was a brief period right when lockdowns happened where people held off on buying homes because they did not know how the situation will unfold. Because of the Fed coming in and introducing mortgage forbearance, people are now chilling in their homes not needing to pay their mortgage for up to an year. This by itself has limited the amount of supply of homes in market. If they did not have mortgage forbearance, people would have had to sell their properties because they may not have the emergency funding that is needed to handle a sudden unemployment or any covid related emergencies. And with more supply in the market, homes would not have gone up 20%+. And if my home went up 20%+ and my stocks basically doubled or tripled, of course I will go out and buy a bigger/newer property. But what if their properties did not go up 20% and stocks were down?

Your three reasons are valid only because the fact the Fed bailed out the stock and real estate market which allowed the influx of buyers to come into the picture. Otherwise if forbearances were not a thing, you would definitely see more supply in the market and buyers may not even touch housing even with lower rates.

I believe we still would have seen buyers coming out to buy, maybe there might have been slightly less of them but they would have entered the market.  Pre-covid the market was a very healthy sight seller market with a good balance of buyers and sellers.  Of course if the Fed and Gov't didn't step in with stimulus you would have seen bigger stock market losses and an initial drop in home prices but many of those same buyers would have come back into the market because interest rates would have fell anyways due to the economic downturn.  Remember that it was gov't that mandated the lockdowns so it only made sense for them to provide stimulus like the checks, PPP loans, unemployment benefits, etc.

I think inventory levels would be slightly higher if there was no mortgage forbearance program, particularly in most parts of Orange County including Irvine. I'd venture to say that very few Irvine buyers were materially affected by covid.  Most all of the job losses were to lower-income earners and/or people working in very specific industries like travel, hospitality, retail, restaurants, etc.  This slight increase in inventory would have resulted in prices not increasing as much as they did.  Btw, prices did prices have increased about 10% since Jan/Feb 2020 definitely not 20%. A large portion of demand for housing was driven by a lot of move-up buyers and people that wanted to get out of apartments because they were looking for more space (office/den, extra bedroom, yard for kids, etc).  Also, many people were relocating from other areas like LA, Bay Area, and other cities because they wanted a suburban home in Irvine and other parts of Orange County because they were able to work from home. The high-end buyers were the ones who were most driven by the upward movement in the stock market, the lower-end/middle market buyers tend to be more monthly payment sensitive and don't have as large of stock portfolios as the higher-end buyers. With lower rates, you would have ended that paired with sustained job losses of earners who can afford to buy homes in and around Irvine for prices to drop.

 

[sleepy5136]

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.

Use the same monthly numbers for renters. Do you think they will pay back the landlord that are Individual RE owners or apartment complex owners? 

The kicker if they keep on extend the forbearance another 6.  Then the numbers that is owed to the bank is $30k and $45k respectively. (Using the $2k and $3k payment a month scenario)

So if they don?t pay it back the individual RE investor or Apartment can take them to court. What is the likely hood for them to collect.

So the mortgage forbearance program started since May 2020. So that?s approximately 9 months. Let?s say their mortgage is $2k or $3k a month. So they would owe $18k or $27k to the bank.


As a part of Forbearance program, are they not simply going to extend the life of a loan? There is no way someone who cant pay mortgage of 2K a month can all of sudden start paying 3000 a month once this forbearance is over. 

Maybe SGIP can enlighten us on this subject that how it is going to work.

There is no written law on how this will be handled. It is completely up to the lenders. Some of them may ask for the entire amount up front, some may extend the life of the loan, some may require you to pay it within a given time frame, etc. Its completely up to the lender. And because of this, I think it will be interesting to see if there will be any laws that tells lenders how to handle forbearances once forbearances are lifted. Otherwise you'll have to see what the majority of the banks ends up doing with forbearances to see how the housing market will be impacted.

As for the point made before on the fact that foreclosures will happen, that may be true but they will be selling when the market was up 20%+. To be frank, its quite BS that homeowners get to be bailed out by the government. I'm not sure if landlords would look at foreclosures and reject a candidate because they had a foreclosure. But I sure know landlords that will reject tenants that have been evicted before. So if there were to be government support, it would make more sense to help the renters, not so much the homeowners. Maybe I'm bias because I got the short end of the stick when buying my first home, but it is quite frustrating seeing how housing could have dropped significantly if the government did not interfere.

If I had to guess what caused the real estate market to get out of balance more it would be the significant drop in interest rates and the mortgage forbearance program to a lesser extent. You can blame the Fed bond purchasing program for that. Biggest reason why many of my buyers started coming back into the market in April/May was due to 1) drop in rates and 2) looking to upgrade/get out of an apartment and 3) home prices stabilized.

I have questions for you assuming mortgage forbearances did not exist:

1. Would you have the same influx of buyers?
2. Do you think the inventory levels will be the same as it is currently or in the past six months?
3. Do you think that homes would jump up 20%+ in pricing in the span of 8 months?

My answer to all those questions is no. For one, there was a brief period right when lockdowns happened where people held off on buying homes because they did not know how the situation will unfold. Because of the Fed coming in and introducing mortgage forbearance, people are now chilling in their homes not needing to pay their mortgage for up to an year. This by itself has limited the amount of supply of homes in market. If they did not have mortgage forbearance, people would have had to sell their properties because they may not have the emergency funding that is needed to handle a sudden unemployment or any covid related emergencies. And with more supply in the market, homes would not have gone up 20%+. And if my home went up 20%+ and my stocks basically doubled or tripled, of course I will go out and buy a bigger/newer property. But what if their properties did not go up 20% and stocks were down?

Your three reasons are valid only because the fact the Fed bailed out the stock and real estate market which allowed the influx of buyers to come into the picture. Otherwise if forbearances were not a thing, you would definitely see more supply in the market and buyers may not even touch housing even with lower rates.

I believe we still would have seen buyers coming out to buy, maybe there might have been slightly less of them but they would have entered the market.  Pre-covid the market was a very healthy sight seller market with a good balance of buyers and sellers.  Of course if the Fed and Gov't didn't step in with stimulus you would have seen bigger stock market losses and an initial drop in home prices but many of those same buyers would have come back into the market because interest rates would have fell anyways due to the economic downturn.  Remember that it was gov't that mandated the lockdowns so it only made sense for them to provide stimulus like the checks, PPP loans, unemployment benefits, etc.

I think inventory levels would be slightly higher if there was no mortgage forbearance program, particularly in most parts of Orange County including Irvine. I'd venture to say that very few Irvine buyers were materially affected by covid.  Most all of the job losses were to lower-income earners and/or people working in very specific industries like travel, hospitality, retail, restaurants, etc.  This slight increase in inventory would have resulted in prices not increasing as much as they did.  Btw, prices did prices have increased about 10% since Jan/Feb 2020 definitely not 20%. A large portion of demand for housing was driven by a lot of move-up buyers and people that wanted to get out of apartments because they were looking for more space (office/den, extra bedroom, yard for kids, etc).  Also, many people were relocating from other areas like LA, Bay Area, and other cities because they wanted a suburban home in Irvine and other parts of Orange County because they were able to work from home. The high-end buyers were the ones who were most driven by the upward movement in the stock market, the lower-end/middle market buyers tend to be more monthly payment sensitive and don't have as large of stock portfolios as the higher-end buyers. With lower rates, you would have ended that paired with sustained job losses of earners who can afford to buy homes in and around Irvine for prices to drop.

I see where you are coming from and I think the only difference we have is I'm thinking the mortgage forbearance had a bigger weight towards the real estate market then you think. Because at the end of the day, the people that are rich are not impacted and will definitely snatch properties because they can (high or low interest rate). But I would think the majority of the buyers aren't in that category during the pandemic (correct me if i'm wrong tho). Specifically the ones that are looking to "upgrade" were able to do it because they gained a significant amount of equity during 2020. So selling their homes to "upgrade" was a breeze compared to other times. And you add their investment portfolio possibly doubling if they have stocks. It makes upgrading much easier despite the increase in pricing of the home they will be buying. But if mortgage forbearance was not there, there will definitely be more inventory in market, selling homes would arguably be more difficult because who will buy their home that quick? Home buyers will also be more picky when there are more inventory even with low interest rates. Contingency waivers wouldn't be a thing so that would cause homes to not sell as quick either and might even cause a lot of homes to remain in the market. Not to mention, job stability wasn't really there for white collared jobs as you might think. I work in tech and tons of companies were doing layoffs despite "record revenues" (Microsoft, Salesforce, Airbnb, all Big 4 accounting firms, etc). There are even talks right now of potentially layoffs happening in 2021...

With mortgage forbearance, it created a market where existing homeowners were and still are on cruise control in terms of their finances. If I can defer my mortgage for one year? Jeez... I wouldn't need to worry about losing my home or renters not paying their rent even with no job. I can postpone my mortgage(s) and collect unemployment + extra unemployment benefits which will cover more than enough. Also, lets not forget how many millions of renters are not current with their rent? If mortgage forbearance didn't exist, the landlord would need to eat that cost. Which may indeed cause a good amount of them to put the property in the market which in turn would turn the real estate market to a buyers market.

That's why the Fed is continuing to bail out the real estate market. I personally do not agree with it. but if they did not bail them out, I really think it would have caused a lot of homeowners to sell their properties and they would need to be forced to rent. I honestly do not see an issue with this, if anything, it would have only accelerated the demand for rentals sooner and a correction to the real estate market in the near term which is healthy. Existing home owners won't feel much pain as long as they don't need to sell anyway. That in turn would have led to the second best buying opportunity in the last twenty years. But too bad...

 

[usctrojancpa]

We'll have to agree to disagree on the true level of impact of the mortgage forbearance program on home prices via a significant increase in inventory. Prices really began to accelerate in the fall of 2020 and the majority of my buyers already purchased their homes by that time. Anyhow, what do you think will happen once the mortgage forbearance program expires?  My guess is that it may slightly increase resale inventory but nothing material as buyer demand will soak up that extra inventory. The market is currently out of balance and is not healthy since it swung too much to a seller's market.  I know that both my buyers and I would welcome the market getting back into balance with more inventory.

 

[sgip]

Forbearance measures, just like the 2008-2011 Loan Modification tools deployed during the GFC, are not materially going to impact the price or availability of homes. Deeply distressed homes in the 2008-2011 market were foreclosed, resold, and more often than not packaged in bulk to be sold to hedge fund investors. These funds either kept the properties off the market as rentals or unwound them one by one as any asset manager at the time would have done. Very, very few foreclosed or loan modified homes were ever available to be purchased by FTHB or rental investors relative to the skilled flippers and bulk purchase operators. The little guy always loses when playing in a rigged game - which was the state of affairs at that time period for people hoping to catch a foreclosure/short sale deal.

Prices fell in 1991-1994 and again in 2007-2008 when there wasn't a back stop. Once back stops were used in 2008-2011, the Real Estate industry as a whole is completely dependent upon some form of government intervention to preserve values. If a COVID-21 appears and we all have to shut down once more, forbearances and loan mods - government back stops - will again sustain the price of housing. Waiting for something that depresses the prices of homes is about as futile as holding ones breath underwater waiting for gills to evolve. Could it happen? Possibly, but I wouldn't bet big on it.

I can't stand the often used phrase I hear from "small r" realtors, that "Anytime is a good time to buy". I do not support that line of thinking in this post. If someone wants to buy, find a home to start with and ladder up from there because prices will flatten and unlikely to decline for the foreseeable future.

 

[nosuchreality]

Nutshell, housing at a national level is too big to fail.

 

[eyephone]

Nutshell, housing at a national level is too big to fail.

Haha

 

[eyephone]

Do you think we believe that guy? After his conspiracies.

 

[eyephone]

The mortgage forbearance and pause to evictions is only kicking down the can.

More Than $57B In Uncollected Rent Putting The Squeeze On Apartment Landlordshttps://www.bisnow.com/national/new...ent-collections-sagging-more-than-ever-107508

Individual RE investors that own houses or condos are also getting squeezed.

 

[zubs]

The can will be kicked forever, because death is the other choice.

 

[eyephone]

The mortgage forbearance and pause to evictions is only kicking down the can.

More Than $57B In Uncollected Rent Putting The Squeeze On Apartment Landlordshttps://www.bisnow.com/national/new...ent-collections-sagging-more-than-ever-107508

Individual RE investors that own houses or condos are also getting squeezed.

Housing experts told WUSA9 when this current moratorium ends, it is projected that renters will be $70 billion behind in rent.
https://www.abc10.com/mobile/articl...elief/65-4c31cb96-3bab-4893-b704-54a0c3f6add1

Another estimate at $70b

 

[nosuchreality]

Nutshell, housing at a national level is too big to fail.

Haha

Don't worry, you can fail.

A national level free fall because there is no funding to keep the transactions rolling, not going to happen.

 

[eyephone]

Nutshell, housing at a national level is too big to fail.

Haha

Don't worry, you can fail.

A national level free fall because there is no funding to keep the transactions rolling, not going to happen.

So this is not a hypothetical scenario. People have and are already feeling the pinch.

Landlords bear financial burden of eviction moratoriums for renters

Landlord Mario Tafarella is owed more than $30,000 in rent from two of his Las Vegas rental properties in Desert Shores, and it%u2019s money he never will receive.

%u201CThirty grand %u2014 take it out of your bank account. Would it have a financial impact on you?%u201D Tafarella said, referring to eviction moratoriums implemented by Gov. Steve Sisolak and the federal government. %u201CIt%u2019s horrible what was done, and it should be illegal.%u201D

Shannon Conley, a landlord in Reno, said the eviction moratoriums are frustrating. She found herself not only out rent money from her tenant but also discovered extensive damage to her property including %u201Cthe carpet with all (their pet) ferret%u2019s poop on it.%u201D


Smith had to tap into his savings when one tenant stopped paying rent last year after the eviction moratorium took effect. He%u2019s lost more than $6,500 and had to requested a mortgage forebearance on the home.

%u201CI used it on that house %u2014 I had to,%u201D he said. %u201CThey put it on the back end of the loan (but) I did try to catch up on the payments.%u201D

Real estate broker Tom Blanchard of Signature Real Estate Group said other than restaurants and bars, smaller landlords have %u201Chad to bear the brunt of this pandemic.%u201D

Real estate broker and Las Vegas Realtors President Aldo Martinez said smaller landlords usually don%u2019t have enough leverage to cover a tenant%u2019s missed rent payments for an extended period of time, adding that some clients are now looking to sell their rental properties.

%u201CThey%u2019re just cutting their losses where they can,%u201D he said. %u201CIf you think owning rental properties is a good idea because there%u2019s someone helping you pay down the property plus you%u2019re making some income, all of that makes sense. But then you run into COVID and an eviction moratorium and now a state that was actually very good for landlords has become a catastrophe for them.%u201D
https://www.reviewjournal.com/busin...-of-eviction-moratoriums-for-renters-2262869/

The purpose: to show real life examples that people are getting squeezed because people are not paying their rent to INDIVIDUALS that own rental property.

 

[nosuchreality]

One wave of the Fed?s wand and all those Mario?s become vapor capital on the bank spreadsheets

Again, you can fail. 

Housing will sit empty and unbuyable, the losses with be socialized into our national debt and burning deals will be given to big players.

Now where have we seen that before...

 

[eyephone]

I think many people on TI live in a fantasy world. They do not like it because it may mess up with their potential income or theory. It is what it is. Someone that bring up the pros and cons is more credible than someone that just brings up the pros. (hype or pump only lol)

I think it is prudent and fair to bring all facts/numbers to the table: So people can make a wise decision on buying or selling a house.

Sorry not all RE agents tell all the facts. Look what happened last crash.

 

[sleepy5136]

We'll have to agree to disagree on the true level of impact of the mortgage forbearance program on home prices via a significant increase in inventory. Prices really began to accelerate in the fall of 2020 and the majority of my buyers already purchased their homes by that time. Anyhow, what do you think will happen once the mortgage forbearance program expires?  My guess is that it may slightly increase resale inventory but nothing material as buyer demand will soak up that extra inventory. The market is currently out of balance and is not healthy since it swung too much to a seller's market.  I know that both my buyers and I would welcome the market getting back into balance with more inventory.

The impact of mortgage forbearances will not be known until we see more data points on how lenders will address them or if there may be a law that gets passed where all lenders are required to extend the loan for everyone that was in forbearance. If there is a law that requires each lender to extend the life of the loan then there will be no negative impact on the real estate market but maybe the banks that need to swallow the pill in the near term. However, if there are no laws that stipulates that lenders must extend the loan, then it will be very interesting. We will then see how most lenders plan to deal with it. That may lead to issues not only to the banks but also impact to the real estate market. To what degree, who knows.

I do however foresee a huge demand in rentals in the urban cities in the near future once people are allowed to go back to the offices. So there will be demand for rentals and it might be a big demand once mortgage forbearance and eviction moratoriums are lifted. Because I know there are a lot of people that are dying to go back to the office and are tired of being stuck at home.

 

[sleepy5136]

Forbearance measures, just like the 2008-2011 Loan Modification tools deployed during the GFC, are not materially going to impact the price or availability of homes. Deeply distressed homes in the 2008-2011 market were foreclosed, resold, and more often than not packaged in bulk to be sold to hedge fund investors. These funds either kept the properties off the market as rentals or unwound them one by one as any asset manager at the time would have done. Very, very few foreclosed or loan modified homes were ever available to be purchased by FTHB or rental investors relative to the skilled flippers and bulk purchase operators. The little guy always loses when playing in a rigged game - which was the state of affairs at that time period for people hoping to catch a foreclosure/short sale deal.

Prices fell in 1991-1994 and again in 2007-2008 when there wasn't a back stop. Once back stops were used in 2008-2011, the Real Estate industry as a whole is completely dependent upon some form of government intervention to preserve values. If a COVID-21 appears and we all have to shut down once more, forbearances and loan mods - government back stops - will again sustain the price of housing. Waiting for something that depresses the prices of homes is about as futile as holding ones breath underwater waiting for gills to evolve. Could it happen? Possibly, but I wouldn't bet big on it.

I can't stand the often used phrase I hear from "small r" realtors, that "Anytime is a good time to buy". I do not support that line of thinking in this post. If someone wants to buy, find a home to start with and ladder up from there because prices will flatten and unlikely to decline for the foreseeable future.

Hmm I'm reading an article that was dated in March 2010 and specifically says California real estate prices at that time declined by 30%. In addition, ~1.1m homes were foreclosed in California in 2008. Unless that article is wrong, I do think 2008 foreclosures did impact the price of the homes. In terms of availability, it did not specifically say how many of the ~1.1m were put out to the market and who the buyers were (FTHB, investment firms, flippers, etc).

link to article:https://www.martindale.com/real-estate-law/article_Blank-Rome-LLP_940122.htm

As to covid-21 which I hope will not happen, you are right that there will be stimulus going to the real estate market. The point I'm trying to make is you don't need backstops in real estate. In the event a homeowner does not have enough funds to continue owning the home, it makes complete sense for them to sell their current property and go rent. The idea that homeowners losing their homes due to a crisis does not mean you "must" continue to be a homeowner. Owning a home is not a "right". Just because you lose your home, it doesn't mean you need to live in the streets right? You can still rent.. What I don't understand is why the Fed decided to bail the real estate market. It really wasn't needed and the only reasoning I can think of is they didn't want people losing their homes. To me, that doesn't require a bailout. The impact will be to the housing market that was already hot. A correction in the real estate market due to that would have been completely healthy.

 

[sleepy5136]

The can will be kicked forever, because death is the other choice.

The million dollar question is who will swallow that debt? The Fed? The banks? The landlords? It definitely won't be the renters.. And depending on who takes the hit, it may have severe consequences to the economy.

 

[usctrojancpa]

The can will be kicked forever, because death is the other choice.

The million dollar question is who will swallow that debt? The Fed? The banks? The landlords? It definitely won't be the renters.. And depending on who takes the hit, it may have severe consequences to the economy.

That?s easy, ultimately it?s Joe Taxpayer.  The result will be higher taxes, more inflation, and a US dollar that is worth less than less.