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Residential Real Estate will crash! 🤯
Mortgage Monitor by Black Knight reports above 7% national delinquency rate for June 2020, compared to 10.5% at the end of the last great recession. Mortgage Monitor by Black Knight represents the nation’s leading repository of loan-level residential mortgage data.
The last Great recession lasted December 2007 – June 2009, but it took 6 months to reach a 7% national delinquency rate. Covid-19 recession started in February 2020 based on NBER and my analysis, but took 4 months to reach a 7% national delinquency rate.
Cares Act was signed in law on March 27th. 2020. Cares Act provided an extra $600 weekly benefit to unemployment, expired the end of July 2020, and $1200 for each American. Cares Act provided homeowners 180-360 days (6-12 months) of forbearance under government loans. Cares Act has been active for 4 months. Homeowners may only have 2-9 months left of forbearance. Yet with the extra payments from Cares Act, 3.5% out of the 7% delinquency are 90+ days late.
Not all cities will experience the same crash. Some cities may crash less or more than others. Some cities will not crash, but experience 0% or low price growth for a few years. Luxury homes and unaffordable homes are much more likely to crash than affordable homes. Very unlikely for a V shape recovery. Out of the total 17,800,000 unemployment at 11.7% rate in June 2020, Permanent Job loss is 2,900,000. During the last recession, the highest unemployment rate was 10%.
I believe home delinquency will continue to increase for the next 2-9 months. FHFA Home Prices did not bottom out until June 2012, 3 years after the last recession supposedly ended. Very unlikely for a V shape recovery. Out of the total 17,800,000 unemployment at 11.7% rate in June 2020, Permanent Job loss is 2,900,000. During the last recession, the highest unemployment rate was 10%.
Source: BLACK KNIGHT Mortgage Monitor
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JUN 2020 Mortgage Monitor Report by BLACK KNIGHT