Friday, November 11, 2016

What ~is~ going on with foreclosures?

Obviously the internet is abuzz with reports of foreclosures rising around 27%. And no one yet is quite sure why. I'm not even sure why yet. But a do have a few suspicions. Right now I think the biggest bulls eye is the rental market which once used to be red hot - is now NOT.

Since I got my rental filled over the summer conditions have deteriorated rapidly. Right now there is a property in my city that has been on the market for 127 days. And it's not a shitty place. Not in a bad neighborhood. That is more than 4 months without income for the owner. I furiously started trying to find out when this house last changed hands. Luckily it hasn't since the 1980's. So it is not at risk of being defaulted on. (presumably) Things have gotten so out of whack that I have to started searching through every place to see when houses last turned over. There are quite a few properties that are now in the 60 days range.

The next oldest property is at 112 days and is pretty much brand new. I think they built the tiny condo complex about 4 years ago. So - you can see the quality of these properties is quite good yet worrisome for the whole sector.

If I had to guess - and I do...... anyone who bought a place with the expectation of renting it out is now under a lot of financial stress if their unit is not currently filled. Some people can withstand a month without that income. But most can not. And most especially not if you bought within the past few years. You just don't have those resources. At least that is what I believe.

Additionally, there could still be the tail end of the mortgage crisis. My 10 year reset would have been in March of this year. I know a guy who's reset was over the summer. So there might be a few more stragglers.

But for the most part - I'm looking at the rental market right now because when houses start sitting for 2-4 months - that is a huge red flag. Some of those people are not going to make it.

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