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Home prices in the United States rose an unprecedented 18.6% in June, making it the third consecutive month of strong price increases, according to a new report from S&P Global. However, foreclosures have also started to increase in recent months and are expected to increase until the end of the year following the expiration of the federal moratorium.
Home prices continued to rise in June, reaching the largest month-to-month increase since the S&P Dow Jones indices began recording them in 1987. While some experts believe the rise is the result of delayed purchases By the COVID-19 pandemic, others suggest a theft of city apartments is helping drive the boom.
“June 2021 is the third consecutive month in which the rate of house price growth has set a record,” Craig J. Lazzara, managing director and global head of index investment strategy, told The Associated Press on Tuesday. at S&P DJI. “The last few months have been extraordinary, not only in terms of the level of price increases, but also in terms of the consistency of earnings across the country.”
Lazzara further noted in the S&P report that “this increase in demand may simply represent an acceleration in purchases that would have occurred in the next few years anyway.”
“We previously suggested that the strength of the US real estate market was in part due to the response to the COVID pandemic, as potential buyers move from city apartments to suburban homes. The data for June are consistent with this assumption, ”he added.
The prices are high in part because so few homes are on the market. Ultra-low interest rates have helped boost demand, the Wall Street Journal says, but prices have risen so much that new owners are afraid to leave the market.
“The rise in prices during the summer months reflects a combination of peak demand and larger homes for sale, as families with school-aged children vied for a place in the new school year,” he said. said George Ratiu, director of economic research for Realtor.com. World report. “In a notable change, July also saw real estate markets welcome a larger influx of new listings, as homeowners across the country moved to move to sale plans delayed by the pandemic. “
Plus, demand isn’t as strong as it looks: Despite high prices, several real estate agents have told the WSJ they are only getting a tiny fraction of deals per home like before the pandemic. Even last week, two months after the S&P report, real estate firm Redfin reported to the newspaper that active listings on its site were down 23% from the previous year, while noting that they were still around 16% higher than their March lows.
Seizures on the rise
Another likely factor is that foreclosures on Americans’ homes accelerated in 2021 and are expected to worsen significantly before the end of the year.
According to an Aug. 10 report released the previous month by ATTOM Data Solutions, foreclosure requests have increased 40% since the start of the year, signaling that a growing number of homeowners are being forced to default on their mortgages.
Until the end of July, homeowners whose mortgages were guaranteed by the U.S. federal government had special foreclosure protection through forbearance offered during the COVID-19 pandemic. However, as vaccination resumed and cases declined in the spring, the federal government sought to remove most of the pandemic-era social protections, including not only the moratorium on seizures, but also the eviction of tenants and payment of student loans, among others. programs.
According to the Mortgage Banker Association, in early August, 1.75 million federally guaranteed mortgages were in arrears, with about 85% of them at least three months behind on their payments. Despite this, almost none of the $ 10 billion set aside in April for a Homeowner Assistance Fund to help homeowners pay off this debt has been distributed.
Unlike tenants, who were left with few options after the U.S. Supreme Court overturned the moratorium on evictions last week, landlords have been given several methods to mitigate, slow down or avoid the onset of a foreclosure procedure after the end of the moratorium by the consumer. Financial protection office.
Rick Sharga, executive vice president of RealtyTrac, a subsidiary of ATTOM, told Fox News on Tuesday that ending the moratorium “will not result in millions of foreclosures, but we will likely see a steady increase in default activity for the balance of the year. ” He predicted that many of the foreclosures will not be new procedures, but have resumed pre-pandemic ones that were suspended by the moratorium.
However, Sharga also noted that it would be in part “new foreclosure activity on vacant and abandoned properties,” or what are colloquially referred to as “zombie foreclosures”. These occur when a family leaves a home right after it fails on the mistaken assumption that they should do so immediately when they receive a foreclosure notice. According to ATTOM, zombie seizures increased by 21% in the second quarter of 2021.
“The situation is likely to be somewhere between mild and severe, at least in part because lenders may not want to be seen as reapers chasing vulnerable families from their homes,” said Todd Teta, chief product officer and of ATTOM technology. Investigator. “We will certainly find out in the coming year.”