Foreclosure is a nightmare that can come true for homeowners who fall behind on their mortgage payments.
Should you be afraid of foreclosures if you live in San Diego and plan to buy a house?
Foreclosures San Diego Trends and Recommendations
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What is a foreclosure
When a borrower cannot make their mortgage payments, the lender may initiate a foreclosure proceeding, resulting in the sale of the property to repay the outstanding debt.
Foreclosures can significantly impact both the borrower, who may lose their home, and the wider community, as foreclosed properties often sell for less than their market value, leading to decreased property values in the surrounding area.
Foreclosures also strain local governments, which may be responsible for maintaining the property until it is sold.
Why You Shouldn’t Fear Today’s San Diego Real Estate Foreclosure Headlines
If you’ve seen recent headlines about foreclosures surging in the local San Diego housing market, you’re certainly not alone. There’s no doubt, the stories in the local media can be pretty confusing right now. They may even make you think twice about buying a home for fear that prices could crash.
The data shows a foreclosure crisis is not where the San Diego market is headed. Understanding what that means is mission-critical if you want to know the truth about what’s happening today. Here’s a deeper look.
According to the Year-End 2022 U.S. Foreclosure Market Report from ATTOM, nationwide foreclosure filings are up 115% from 2021, but down 34% from 2019. As national media headlines grab onto this 115% increase, it’s more important than ever to put that percentage into context.
While the number of foreclosure filings doubled last year, we need to remember why that happened and how it compares to the market’s more normal, pre-pandemic years.
Thanks to the forbearance program and other relief options for homeowners, foreclosure filings were down to record-low levels in 2020 and 2021, so any increase last year is — no surprise — a jump up. Rick Sharga, Executive VP of Market Intelligence at ATTOM, notes:
“Eighteen months after the end of the government’s foreclosure moratorium, and with less than five percent of the 8.4 million borrowers who entered the CARES Act forbearance program remaining, foreclosure activity remains significantly lower than it was prior to the COVID-19 pandemic. It seems clear that government and mortgage industry efforts during the pandemic, coupled with a strong economy, have helped prevent millions of unnecessary foreclosures.”
Clearly, these options meant millions of homeowners could stay in their homes, allowing them to get back on their feet during a very challenging period. With home values rising at the same time, many homeowners who may have found themselves facing foreclosure under other circumstances were able to leverage their equity and sell their houses rather than face foreclosure, and that trend continues today.
And remember, as the graph above shows, foreclosures today are far below the record-high 2.9 million that were reported in 2010 when the housing market crashed.
Foreclosures in San Diego in the Post- Pandemic era
The COVID-19 pandemic has resulted in widespread economic turmoil and job loss, leading to increased cases of house foreclosures in San Diego. As a result, many homeowners in the area have struggled to keep up with mortgage payments, and have faced the threat of losing their homes.
The government has introduced mortgage forbearance and eviction moratoriums to help homeowners stay in their homes during the pandemic.
However, many are still facing the reality of foreclosure. The long-term impact of the pandemic on the housing market and economy in San Diego is still uncertain. Still, it is clear that the pandemic has significantly impacted the housing market and many homeowners in the area.
San Diego Foreclosures Trends and Prognosis
Despite the challenges posed by the pandemic, the housing market in San Diego is showing signs of resilience and recovery. As the economy slowly improves and more people return to work, the demand for housing is expected to increase, which could lead to stabilizing housing prices. Additionally, low-interest rates and government incentives may encourage more people to enter the housing market, helping to drive demand and spur growth.
In the future, experts predict that the housing market in San Diego will continue to recover and see sustained growth, driven by factors such as a solid local economy, a growing population, and continued interest from investors.
“With the right policies and support, the housing market in San Diego has the potential to be one of the strongest and most resilient in the country, providing homeowners with security and stability, and creating opportunities for new investment and growth.”
Bill McBride, Founder and Author of Calculated Risk:
“The bottom line is there will be an increase in foreclosures over the next year (from record low levels), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”
San Diego foreclosures and impact on the housing market
Dylan:
“Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, which won’t lead to a crash in home prices.
If you want to discuss this topic or need additional information on the San Diego housing market, please contact me at 📞619.806.1519 or dylan@dylangrealty.com.”
Reasons not to be afraid of the possible foreclosure
- You always have options for avoiding foreclosure: loan modification, refinancing, and short sales, which help avoid foreclosure and keep homes.
- Legal protections: foreclosure is a legal process, and several laws are in place to protect homeowners, including the Fair Credit Reporting Act and the Homeowner Bill of Rights.
- Time to respond: foreclosure proceedings typically take several months to complete, giving homeowners time to explore their options and seek assistance from housing counseling agencies or legal aid organizations.
- Possibility of negotiation: homeowners may negotiate with their lenders to find a solution that works for both parties, such as a loan modification or a repayment plan.
- Fresh start: While losing a home to foreclosure can be a difficult and stressful experience, it can also provide an opportunity for homeowners to start fresh and rebuild their financial stability. Homeowners who successfully navigate the foreclosure process may be able to purchase a home again in the future eventually.
Bottom line - fear of foreclosures vs. benefits of the homeownership
In conclusion, the COVID-19 pandemic has had a significant impact on the housing market in San Diego, leading to increased cases of house foreclosures.
However, despite these challenges, the housing market in San Diego is showing signs of resilience and recovery and is expected to continue to grow and thrive in the future.
While the fear of foreclosure is a genuine concern for many homeowners, the benefits of homeownership cannot be overstated.
Homeownership provides stability, security, and a sense of pride and accomplishment. It also allows homeowners to build wealth over time as their homes appreciate and gives them a valuable asset they can pass down to future generations.
In the end, while the pandemic has presented many challenges, it has also presented opportunities for growth and resilience in the housing market in San Diego. With the proper support and policies in place, homeowners in the area can look forward to a bright future filled with homeownership security, stability, and benefits.
If you have any dilemmas or concerns about San Diego real estate market trends, mortgages, and the possibility of foreclosure, please get in touch with me today.
If I do not answer immediately, I’ll contact you in less than 24 hours.
Dylan