Will the End of the Mortgage Forbearance Change the Housing Market?
Nationwide, about 7.2 million home owners were in the mortgage forbearance program at the height of the pandemic. At the beginning of September that number dropped to 1.7 million home owners. Though that number is lower than at the height that is a large amount of inventory that could potentially be hitting the market in the next couple of months. (That depends the route that people will take to get out of forbearance) But if even one percent decide to take sell that is 170,000 homes hitting the market and if that is divided evenly among the states (which it obviously wont) That is potentially an extra 3,400 homes hitting Utah's market which is currently is around 4,000 active homes on the market. So having an extra chunk of homes hit the market would effect the already cooling off market.
How it looks for Utah. The ending of the forbearance wont look universal. The numbers I provided above are what happens if the effects are the exact same for all states nation wide, which is impossible. Simply because not each state has the same population or policies in place. I don't know how each state will be effected but here are my thoughts on Utah.
Utah has had less homeowners take forbearance than other states. Utah is also one of the states with the lowest unemployment rates. Those two numbers mean that the ending of the forbearance wont have as large of an impact as other states will have, but there will still be an effect. First off nationwide market trends will still influence purchasers perspective of the market. If another state is getting some very negative housing market stats and it creates a market crisis for them, that news will make purchasers more hesitant to buy. Second, if we have buyer hesitancy and an quicker increase in inventory, that would strongly influence days on market for homes and create a market cool down.
Will it cause a market downturn? I have a hard time seeing that because of the incredibly high buyer's demand here in Utah. It would take a very large inventory increase or incredible market crash to stop that demand in its tracks. Obviously, those things are possible and you can't rule them out.
So you now have an idea of what may potentially happen to the housing market because of the forbearance. Did you take forbearance? Do you need to know your next steps? First thing, if you are in forbearance, call your lender and start making a plan of what you can do. I'll put a list below of some of your options, but whatever you do, you need to talk it through with your lender so they know what direction you are going and they don't start any type of foreclosure process.
Full repayment, which is a one-time lump sum payment.
Make intermittent payments. (pay extra on top of your normal payment)
Lengthen your loan term
Payment deferral (pay it off as soon as you sell)
Pursue a loan modification
I hope this helps. It can seem overwhelming or scary if you are in this situation but just remember that there are avenues out and as long as you clearly communicate with your lender, things should work out. Don't hesitate to reach out with any questions. Contact me here.