Even though Covid 19 relief packages and other protections against foreclosures were provided to the American public, it seems that in recent weeks foreclosures are definitely on the rise once again.
ATTOM Data Solutions shared information in a recent report that stated in 29 out of 50 states in the United States of America, foreclosures rose by 16% from January to February of this year. And it looks like this upward trend could continue for the foreseeable future.
What Does the Foreclosure Data Tell Us?
You may find this surprising with all of the precautions that were taken, but foreclosures are certainly up in recent weeks and months. In the month of February, 1 property for every 12,182 properties wound up in foreclosure, which is more than a 16% jump when compared to January.
It actually gets even worse. Also, between January and February, completed foreclosures have risen by 8%. So, more lenders have used the courts to remove homeowners from the ownership deeds of their former property.
Another important stat is that a number of states are beginning to see foreclosure increases throughout the US. In fact, more than half of the states – 29 – have noticeable foreclosure increases beginning this year. And the foreclosure rates are the highest in the following states:
Out of the five states mentioned, Utah was the worse for wear. They experienced 1 foreclosure for every 3883 properties, which is a very serious situation indeed.
For many of you reading this, this is undoubtedly very surprising news. It seemed like federal and state governments were staying on top of this issue. Over the last year, to fight back against an uprising in foreclosures, we put in place:
- Pandemic Relief Bills
- Mortgage Forbearance
- Foreclosure Moratoriums
Apparently, this wasn’t enough to keep the onslaught of foreclosures at bay. Who knew? Actually, many people knew that shutdowns would lead to economic difficulties.
Related: Learn how our students Harry & Victoria took advantage of the situation.
Rick Sharga from RealtyTrac reminds us that homeowners are protected from foreclosure actions if they’re a borrower in a forbearance program, or if they have a government-backed loan than the government has banned foreclosures on these loans. But this is strictly for homeowners.
Investment and commercial property owners along with homeowners who have abandoned their homes or left them vacant will not necessarily experience the same foreclosure protections. This is likely why foreclosures are beginning to increase even with government programs in place.
Should Investors Remain Cautious?
Do you like to purchase distressed properties to add to your overall investment portfolio? If so, the latest trends likely seem promising to you, but I recommend exercising caution without getting overly enthusiastic for the moment.
First off, the foreclosure increases shared by ATTOM only represent what recently happened on a month-to-month basis. Looking at the overall picture of what foreclosures looked like before the pandemic, we see that they are down significantly still from those days.
As an example, from February 2019 to February 2020, there was a 77% drop in foreclosures across the board. And even more to the point, completed foreclosures fell by 85% during the same timeframe.
Foreclosures are showing signs of being on an upward trend at the moment, but it’s impossible to tell if distressed properties are going to reach wide availability in the near future. Once Covid-19 protections and moratoriums expire, the supply of foreclosed properties will likely stay low.
What Can Investors Do?
If you want to get in on the action with foreclosed properties, using an online bidding app is certainly a good idea. This gives you the ability to bid on properties that are located all around the country.
Also, make it a point to opt for cash offers whenever it’s possible. And if this is an impossibility, make sure you have a written pre-approval prior to submitting your bid.