The Driving Factors of Real Property Foreclosures and Distressed Sales

 A respected presence in the Los Angeles real estate community, Aaron Marzwell is a seasoned real estate developer and investor. He has served as the CEO of APPA Real Estate since the firm’s inception in 2013. Aaron Marzwell is a professional at identifying and negotiating properties, as well as restructuring distressed assets.

In the United States, distressed real estate property sales and foreclosures are nationwide phenomena. More property owners are finding it difficult to maintain their properties financially, and more tenants are facing difficulties with regard to fulfilling their end of the agreement as per mortgage agreements. While it appears to be plausible to attribute the trends to high housing costs, the cost of a house is only one of many factors that can make it expensive to live in for the tenant or owner.

Who would have thought that a first in a generation pandemic would actually be a good thing for housing values? While the economy is facing new challenges including major supply chain issues you start to realize that there has been a massive amount of money injected into the economy. Also, in many high-cost metro areas you still have money flowing in from investors and in parts of California you still have foreign money coming in, largely from Asia buying homes with no contingency requirements and fast close promises. So no surprise that even for a professional working couple buying a home right now with limited inventory is problematic. However, much of this is because of a stunted housing market with inventory. As a new report highlights, inventory is set to increase by 15% over the next few months because of people exiting forbearance periods.

There will be more housing inventory hitting the market soon. As home prices are up and most are no longer in negative equity situations, some will decide to sell into this hot market. Obviously not paying your mortgage for 12, 14, 16, or even 18 months is a nice bonus that party is coming to an end. This research found that most are not going to bring their mortgage current. Assume someone took a forbearance and their monthly mortgage cost was $2,000 per month, some may be behind by up to $36,000 when the forbearance period ends. Okay, well what if you can’t make it current? You can defer the payments to the end of the mortgage but you still owe that and many got used to not even paying the regular monthly payment. So a sizable portion will be selling. That selloff along with interest rates increase will create a great opportunity for savvy investors.

APPA is actively tracking these trends and looking to take advantage of this opportunity. Go to www.apparealestate.com if you would like to learn more.