Brace yourself: Home foreclosures are on the rise in the Bay Area after the pandemic has mostly stopped.
But while foreclosures are poised to continue their upward trend in the coming months, the recent surge signals a return to normal, not an upcoming housing crash, property experts say. says there is.
New data from property analytics firm ATTOM shows that the number of foreclosures initiated in the five-county area increased by 90% in the first half of this year compared to the same period in 2021. Still, the number of Bay Area foreclosure filings (one for every 1,419 residential units) remains below pre-pandemic levels.
“We need to see exponential growth before the Bay Area market starts to feel the impact.”
Shharga said this was largely due to tolerance plans offered by the federal government and private lenders to allow struggling homeowners to suspend mortgage payments during the coronavirus pandemic. Additionally, a $1 billion statewide mortgage relief program available to an estimated 13,000 Bay Area households has helped thousands of borrowers.
However, since the moratorium on federally-backed mortgage foreclosures expired in July 2021, and many banks resumed private loan foreclosures around the same time, there have been cases of delinquency or emergency debt before the pandemic. More and more homeowners who fail to take full advantage of the program are losing their homes.
Pandemic programs are also curtailed for renters. Final statewide eviction protections expired late last month, but some Bay Area cities and counties passed their own eviction moratoriums, which are still in effect.
Despite the increase in foreclosure initiations, the 1,707 filings in the Core Bay Area so far this year are down 17% from the same period in 2019 before the pandemic hit. That’s less than half of his 4,555 started in the region during his first six months of 2016, when foreclosures were still declining from the peak of the Great Recession in the late 2000s.
Contra Costa County recorded the highest foreclosure filing rate in the region this year, accounting for 0.12% of all residential units, or 1 in 833. This is followed by Alameda County at 0.08%, Santa Clara County at 0.06%, and San Mateo. County is 0.05% and San Francisco County is 0.04%.
Shalga expects foreclosures to continue to rise and return to at least pre-pandemic levels by mid-2023 across the Bay Area and across the country. And let the foreclosure “return to a slightly higher level than normal a little sooner”.
Oakland foreclosure attorney Jason Estabillo said another factor could be leading to a surge in foreclosures. In recent weeks, he’s been inundated with calls from homeowners, concerned that their moratorium agreement is now ending.
“Banks require advance payment for all delinquencies during the grace period,” Estabilo said.
The surge in foreclosure activity comes at a time when the raging pandemic Bay Area housing market is entering a cooling phase as rising interest rates weigh on buyers and the supply of homes for sale increases. According to the California Association of Realtors, the median selling price of existing single-family homes in the area fell 7% from May to June to $1.4 million.
Real estate experts agree that foreclosures have little to do with the recent softening in prices. This is in contrast to the 2008 housing crash and recession. At that time, millions of homeowners across the country defaulted on risky variable rate mortgages, and the entire housing market was submerged.
But more foreclosure activity could have a disheartening effect on some home hunters, as the broader economy looks more volatile, said John Heckenberg, a realtor at San Mateo-based Compass. said that there is
“I think it affects the mentality of buyers,” says Heckenberg. “There are many external factors that influence people’s decisions.”
For homeowners who have defaulted on their mortgage payments or received foreclosure notices, Heckenberg said the first step is to contact their bank to see if they can come up with a difficult repayment plan. He said that with home prices still at historic highs, homeowners with enough equity in their properties could sell and avoid foreclosures altogether. Added.
“It’s ahead of its time,” says Heckenberg. “The longer you wait, the fewer options you have.”