No new inventory projected from delinquent loans...'Food - Shelter'

Core Logic published their Loan Performance Insights report for November 2020 today. 5.9% of mortgages were delinquent by 30 or more days in November, which is up from 3.9% in November 2019, before the COVID-19 pandemic hit. Serious delinquent loans plus loans in foreclosure are at 3.9%, which is the lowest rate reported since June 2020.

The declining level of delinquency suggests increasing stabilization and reinforces our view that we are unlikely to see a large amount of distressed inventory coming to market over the next 12 months.

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I've heard it through the grapevine that some of our clients are thinking there may be a glut of new properties coming to the market because of forbearance loans coming due, or foreclosures in general. And the logic that follows is that it may mitigate the current supply/demand imbalance. 

We've commented on this in the recent past, but the above update from Core Logic gives you the most recent commentary to point to when it comes up in my client interactions.

Note: The bottom line difference between today's defaults and those that we witnessed in the 2007-8 crash is the equity position owners have, as the market has broadly recovered beyond the 2006 market peak in most locations e.g. there was a time when over half of Arizonans were under water (owed more than there home was worth). Today, of course, things are much different. 

One other interesting related side note is how our market is sustained in no small part by record low-interest rates. We've been worried about the consequence of what seems like the inevitability of an increase in interest rates - we've been saying that for years. What I've come to understand is how low rates - at least for the foreseeable future - are here to stay because the Feds need low rates to service the national debt! A time bomb to be sure. However, even as that potential crisis threatens future stability, we have this eery reality that like precious metals, our industry is anchored in something as real as it gets - real-estate - the land; and of course the 'shelter' we represent - as basic a need as 'food'!

We really are in the right industry; in the right place; at the right time; and with the right company. 

Color me grateful!