Many Oklahomans have a lot of questions about the 2022 real estate market. With mortgage rates starting to rise and the forbearance program coming to an end what does that mean for our local Tulsa Metro area real estate market?
All this uncertainty has the mainstream media to a lone YouTuber coming up with dyer headlines about the housing market. We know it; It’s been proven bad news sells. The unfortunate reality is we will continue to see worrisome headlines for months to come. The fear from these headlines could paralyze some would-be home buyers and sellers; be sure to look to reliable resources that use the data and not emotion when looking at the 2022 housing market.
Here are two recent topics with alarmist headlines you may have seen in the news.
1. Foreclosures Are Spiking Today
One of the headlines I am seeing frequently calls out the rapidly rising foreclosures in the real estate market. The headlines are technically accurate but the picture painted is completely skewed to invoke fear. Those stories focus on an overly narrow view on that topic: which is comparing the current amount of foreclosures to those of 2020. They emphasize that we’re seeing far more foreclosures this year compared to last.
That seems rather concerning. However, though it is a fact that foreclosures are up compared to 2020, a very important fact being left out is because of the forbearance moratorium there were virtually no foreclosures. Let’s do this. When we compare September of 2019 (the last normal year) to this September, the number of foreclosures were actually down 70% according to ATTOM.
Even Rick Sharga, an Executive Vice President of the firm that issued the report referenced in the above article, says:
“As expected, now that the moratorium has been over for three months, foreclosure activity continues to increase. But it’s increasing at a slower rate, and it appears that most of the activity is primarily on vacant and abandoned properties, or loans in foreclosure prior to the pandemic.”
The government did not want history repeated. They got it right. Homeowners who have been affected by the pandemic are not overall being burdened right now. That’s because the forbearance program has worked. Ali Haralson, President of Auction.com, explains that the program has done an incredible job:
“The tsunami of foreclosures many feared in the early days of the pandemic has not materialized thanks in large part to the swift and decisive foreclosure protections put in place by government policymakers and the mortgage servicing industry.”
And the government is still making sure homeowners have every opportunity to stay in their homes. Rohit Chopra, the Director of the Consumer Financial Protection Bureau (CFPB), issued this statement just last week:
“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago. Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law.”
2. The Housing Market Will Slow With Increasing Mortgage Rates
The rise in mortgage rates is another subject bringing about an increasing number of headlines. There are many people claiming the housing market will be negatively impacted due to interest rates rising therefore causing a dramatic decline to home sales. Again, these headlines are raising unnecessary alarm bells. To put these headlines in perspective let’s look at what history tells us by looking at the data. As we see over the last 20 years, the evidence that increased rates dramatically cause home sales to come to a stop is inaccurate. Home price appreciation doesn’t come to a stop either. First, let’s look at home sales:
Looking back to the last three times rates increased (shown in the graph above in red), sales (depicted in blue in the graph) remained rather consistent. It is factual that sales fell sharply from 2007 through 2010, but as you can see mortgage rates were falling at the same time. The next two occurances showed no meaningful drop in sales.
Now, let’s take a look at home price appreciation (see graph below):
Again, as we can see rising interest rates did not cause prices to depreciate. Outside of the years following the housing crash, we saw home prices continue to appreciate, just at a slower rate of appreciation.
There’s a ton of misinformation going around. If you are considering a move, reach out to me, Sabrina Shaw, here at Homes by Sabrina and eXp Realty as we are always here to serve and guide you.