Forbearance and Unemployment Numbers' Effect on Denver Real Estate Market

What do the current numbers tell us about the difference between delinquency and foreclosure? About values for the top 10% of home prices vs. the entry-level lower-priced homes? Some highlights to this episode include;

We have to make sure that we distinguish this for our clients because the delinquency rates are not foreclosures, they're forbearance. And those numbers of people that are going off on forbearance is growing. More people are coming off forbearance. When they're talking about the delinquency numbers are going up, they're watching that under 30 days, 30 to 60, over 90. That's increasing and that's the number that jumps out on the headlines. Realistically though, the number of mortgages and active forbearance is going down, because remember, we started this in that March and April timeframe. Really, April was the first month that people could skip their mortgage payment with the forbearance, the CARES Act. All of those people had up to 12 months that they could be on forbearance in a three-month cycle. Most servicers are offering it every three months and then at the end of three months, you can choose to extend it or you can come off of it.

When we hit the three-month mark, we saw a massive drop. Well, we just hit the six-month mark and we saw a drop again. It dropped by about 18%. It was down 650,000 people got off of forbearance, and another 800,000 will hit their six-month mark because remember, their 12 months starts whenever they got on the forbearance, it wasn't all in April. Their six-month mark for 800,000 people is next month.

In the beginning, there were 40% of the people that took forbearance continued to make their mortgage payment. They didn't need it, they just wanted to protect what they had. And so think about the psyche of this buyer who's currently on forbearance and maybe they're not even making a mortgage payment. Only 9% of the people who are in forbearance right now have less than 10% equity.

We need to ask ourselves on behalf of our clients, what is their neighborhood doing? How much is it appreciating locally? And being that champion for them to go, "here's where it starts to tip over. Here's what we could sell your house for today."

Maybe go in and do an assessment on how they can upgrade their home or the very specific things that would give them the best curb appeal or the best value for their home, and help them realize it that way. Maybe it's not a transaction, maybe it's just you doing your best job and being the best version of yourself for all of your clients, because the inventory continues to be a problem.