As we move into 2022, the real estate market is facing a lot of questions. We are approaching the end of the forbearance program, and mortgage rates have begun to rise.

The mainstream media, the lone blogger – anyone with a media outlet has realized that bad news sells. In the coming months, we will likely continue to see a rash of troubling headlines. Take a look at what to expect from the housing market next year with reliable sources before you get paralyzed by a headline.

Alarmist headlines are already popping up. Here are two recent topics mentioned in the press.

1. Foreclosures Are Spiking Today

The real estate market is experiencing a rise in foreclosures, as reported in a number of headlines. The stories focus on one aspect of the topic that is overly narrow: the current foreclosure volume in comparison with 2020. In their report, they state that this year’s foreclosures are much higher than last year’s.

That sounds rather intimidating. Although foreclosures are up over 2020 numbers, it’s important to note that almost no foreclosures took place due to the forbearance program last year. According to ATTOM, foreclosures decreased 70% in September compared to September of 2019 (the last normal year).

In the report cited in the above article, Rick Sharga, an Executive Vice President of the firm, stated:

“As expected, now that the moratorium has been over for three months, foreclosure activity continues to increase. But it’s increasing at a slower rate, and it appears that most of the activity is primarily on vacant and abandoned properties, or loans in foreclosure prior to the pandemic.”

Most homeowners who are being burdened right now aren’t those impacted by the pandemic. That’s because the forbearance program has worked. The program has done a remarkable job, explains Ali Haralson, President of Auction.com:

“The tsunami of foreclosures many feared in the early days of the pandemic has not materialized thanks in large part to the swift and decisive foreclosure protections put in place by government policymakers and the mortgage servicing industry.”

Homeowners are still being given every opportunity to remain in their homes through the efforts of the government. Last week, Consumer Financial Protection Bureau Director Rohit Chopra issued the following statement:

“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago. Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law.”

2. Rising Mortgage Rates Will Slow the Housing Market

Increasing mortgage rates is another topic making headlines. Rising rates have some people concerned that they will drastically reduce home sales and adversely affect the housing market. However, the headlines are raising more alarms than is necessary. For a better understanding of these headlines, we need to look at the past. In the last 20 years, there hasn’t been a single example of an increase in rates causing sales to stop suddenly. The same is true of home price appreciation. Let’s look at home sales first:Despite rate increases (shown in red in the graph above), sales (shown in blue in the graph) remained fairly consistent. From 2007 through 2010, sales did decline dramatically, but mortgage rates also fell during this time. During the next two instances, sales did not decline dramatically.

Take a look at the graph below to see how home prices have appreciated:

Once again, we see a rise in rates didn’t lead to a depreciation in prices. Price appreciation continued outside the crash years, just at a slower pace.

Bottom Line

It’s easy to find misinformation online. Get the best advice on what’s happening in the current Denver housing market by contacting me here at The Denver Real Estate Agent.