The foreclosure nightmare that affected the entire nation is practically none existent here in the #bayarea. In the #eastbay cities of Castro Valley, Hayward, San Ramon, Dublin, Pleasanton and the surrounding cities, I could count on one hand the number of foreclosures in the last 12 months.
People are worried that the current runup in home prices that we are experiencing is leading is to the same cliff that we just climbed out of. There are three main differences right now with our current market.
1. There is a lack a supply. Unless you have been living under a rock, this has been the rallying cry of everyone in real estate and mortgage industry in the last couple of years.
2. Financing is more stringent than before. Nowadays, you can't just be breathing and have a social security number to be able to get a loan. The pool of buyers that we have are all well qualified buyers.
3. Economy. Our economy is humming along right now and everyone is so upbeat and positive.
What would derail all this? Derail might be a strong word. I believe it would be affordability. We have had double digit gains year-over-year. Eventually people will get priced out of the market. To some extent I am starting to see this. If people can't afford or chose not to buy because they think it's expensive, eventually the prices will start climbing or maybe, dare I say decrease.
At the rate we are going right now, supply won't be able to catch-up anytime soon. This is specially true here in the bay area.
recently released a report entitled, United States Residential Foreclosure Crisis: 10 Years Later
in which they examined the years leading up to the crisis all the way through to present day.
With a peak in 2010 when nearly 1.2 million homes were foreclosed on, over 7.7 million families lost their homes throughout the entire foreclosure crisis.
Dr. Frank Nothaft, Chief Economist
had this to say,
“The country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010. As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.”
the peak, foreclosures have been steadily on the decline by nearly 100,000 per year all the way through the end of 2016, as seen in the chart below.
If this trend continues, the country will be back to 2005 levels by the end of 2017.
As the economy continues to improve, and employment numbers increase, the number of completed foreclosures should
continue to decrease.