The foreclosure and forbearance ban is at an end—here’s what that means.

It was just announced by President Biden that the forbearance and foreclosure ban enacted in 2020 will end next month. Anytime an announcement like this is made, it makes big ripples in the news, so I’ll address what impact it has on our local marketplace.

A lot of people hear this news and think it’s the end of the world or that the real estate market will crash. We Realtors study the local statistics, though, and we know exactly what’s happening in our marketplace. Quite honestly, I think the market could change a little, but it won’t change drastically, and there are a few reasons why.

First, supply and demand still heavily favors sellers. We only have a month’s worth of available inventory; at this time last year, we had just 2.5 months’ worth of inventory. This means that if all of the active inventory in the market sold, there would be no homes for sale in 30 days. That’s a crazy strong seller’s market!

“Americans are sitting on more equity than they’ve ever had.”

Second, the real estate market has been appreciating pretty much ever since the last housing market crash. Americans are sitting on more equity than they’ve ever had. If you bought a house in 2010, 2011, or 2012, you could be sitting on 50% to 70% equity, depending on your location. If you’re in this situation and in a state of forbearance, you have plenty of equity to pay it back and be in a stable position moving forward. If you’re in the foreclosure process, you can borrow against as little as 20% equity and pay it back (if you wanted to). Some people will elect to let their homes go, which will increase our home supply and affect supply and demand. Right now, though, we have about 20 buyers for every listing.

When the ban is lifted and these changes take place, I think we’ll see the market slow down for 30 to 90 days. Some buyers out there will have a great opportunity to move quickly and get listings under contract in less time because some sellers will want to sell their homes quicker. Some will sell to cash buyers and get out of their homes as quickly as possible, while others will borrow against their homes and pay off the difference of what they owe.

Overall, we won’t see a big change until later on down the line (possibly a year or two from now) because interest rates are still in the low 3% range. All things considered, that still makes now a very affordable time to purchase.

If you’d like to know more about this announcement and its ramifications or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d love to hear from you.