Housing Market’s NEW Nightmare: Foreclosures Surging

Well, times are changing. Foreclosures are jumping across the country, and we expect a lot more foreclosures coming down the line. Figure out what that's going to do to home prices by watching this video as we jump into the data here. That's rapidly changing daytoday.

This is a report that just came out. US home foreclosure filings jump 11% in the month of July and we expect them to go up even more including in Florida where our local title attorneys are saying that foreclosures will be up three to four times as much as they were last year which it is true they are low but the fact is we want to look ahead to the market to see what's going to happen next so we can best prepare ourselves and we expect a lot more foreclosures to be coming down the pipeline for these reasons here. So, let's jump in the top states with rising foreclosures. Number one, Nevada.

Two, Florida. Number three, Maryland. Number four, South Carolina. So, you can see this list here, the percentage change from July 2024.

So, year-over-year, you can see Florida specifically is up 26.63%. And we expect this to continue every single month. We're actually in conversations with asset managers that are now talking with hedge funds to buy this inventory off of their plate so that way it doesn't even hit the market when it does come. And that's something where, you know, this supply will be absorbed.

But at the same time, these foreclosures are going to hit the market and it is going to manipulate the prices and put downward pressure on pricing because, as you know, when a foreclosure sells in your neighborhood, it's going to be used as a comp in many cases with the appraisers and it's going to lower the value of all the properties in the area as people are going to see that price that the bank is willing to sell to maybe an investor or they'll, you know, auction it, you know, through the county. So, let's dig into what we see going on. And this is the number one reason why there's going to be massive number of foreclosures coming up next year. We expect in June and July of next year because it takes times for foreclosures to process especially in judicial states.

So Florida, for example, is a judicial state. The foreclosure process has to go through the court system. And one thing that you want to note is that foreclosures have not really been happening for the last four to five years due to loan loss programs that are now sunsetting. They sunset September 30th, 2025.

So, we're just a little bit over a month away. And that's we're going to see the real damage. Right now, we can see FHA loans across the board are up. They're up to 15% seriously delinquent.

And they don't even show this information on the HU the HUD website. The FHFA they just stopped reporting the data in February of 2025. So we don't know how bad things have gotten in the last few months here. It'll be interesting to see what changes moving forward.

But because borrowers can no longer modify their loans after this time period, that means they're going to start going through the foreclosure process. This is true for FHA and VA. It's the same same exact deadline that will be suns setting and it's something that you want to look out for. In Jacksonville specifically, I did an analysis.

It looks like there was about 6 to 7,000 FHA loans that were originated in the last 2 to three years here. And that means if 15% of those come onto the market, right, it could be a significant amount of inventory that pops on and reduces prices here as we see inventory already climbing nearly 100% over the last year. So sellers need to get realistic about their price. And if you're looking to sell, I would really consider talking to a top agent now before it's too late because we do expect prices to come down.

I know that Powell just came out and indicated that we're going to have a Fed cut on the next meeting in September of probably 25 basis points. But the reality is that's not going to be enough to move the needle and bring buyers back in because we are truly in an affordability crisis. So, not a lot has happened in 2019 from the foreclosure standpoint. The government manipulated the natural real estate market.

They do this by buying mortgage back securities, which they've been doing for decades and decades, pushing prices higher and higher and higher and making it harder for the working class to be able to afford home ownership. And this is why we see the median age of a first-time home buyer be 38 years old nearly a decade later. But here you can see the foreclosure data is changing. Let's look at this.

It's foreclosure filed 2019 4 thou 4 493,000. Okay. Then it went to 2020 214 then 2021 151,000. Right?

So it is just coming down. Prices are going up. Obviously that's going to be an indicator. How could you get foreclosed on when you have so much equity in your house?

Well, there's other things that impact this and there's a natural rate of foreclosures every single year. And because they haven't been foreclosed on, they're all stacking up and they're going to come to market likely in the next 12 to 16 months here. That will drive prices down in the areas that have those foreclosures. And when you look back at history and you look at the foreclosure activity, you can see this.

The Federal Reserve said this in 2009. The majority of the rise in mortgage delinquency and foreclosure in 2007208 came from borrowers with good credit scores, not subprime. Why? Because they bought at the peak of the market.

They're now underwater 20 to 30% and maybe they had job loss. They just give the property back. It doesn't matter if they had a good credit score. If they don't have the cash flow to be able to sustain that house, they have to give it back.

People get sick. There's lots of different life events that could happen. And the inventory has been stacking up now for 3 to four years and will be coming to the market next year most likely. So, Florida is the canary in the coal mine.

Obviously, we saw that foreclosure activity is up about 24%. Now, we're also seeing it's one of the slowest housing markets in the United States. You can see that Miami, Florida, Orlando, Florida, Jacksonville, Florida, that's where I am. And you can see that Tennessee, Nashville, Tennessee is also seeing a lot of trouble.

Arizona is having issues. Columbus, Ohio. We're starting to see the market cool at a very, very rapid rate. This is not just seasonality.

This was actually one of the slowest spring selling seasons for a very long time. So, why is this happening? That new homes are now less expensive than existing homes. Is cuz the builders are now firealing their properties.

They're trying to get as much cash flow as possible so they can start preparing for the next bull market in, you know, whatever it might be, 3, five, seven years. My projection is I think we'll probably hit bottom in the next two to three years from here. But they're buying down rates. There's uh there's a lot of reasons why people would go after new construction.

Number one is they give insane incentives to buyers to make it affordable for them and they buy their buy down their interest rate to like 3 to 4%. The only problem is, and if you're looking at new construction right now, just understand if you're planning on selling that house in the next two to three, even 5 years, that rate buy down won't be in existence. And it's potentially true that, you know, interest rates could be higher in that time period. So, if you sell and you're not buying down the rate, it's likely you're going to have to take a drastic price reduction to be able to find a new buyer to stay in your house.

So, if you're going to get that rate incentive, I would just say, look, you need to live in that house for like 10 to 15 years for that to make sense. The other benefit of the exist of the new construction homes is that they have way cheaper insurance. We have a huge insurance problem in Florida specifically. Our insurance is up 72% from just 5 years ago.

So, there's multiple factors that are pushing buyers to this new construction community. They get lower payments. They get cheaper insurance. Um they're getting insane incentives and that's driving people away from the existing homes.

Now, existing homes still had a wonderful month in July, and we can dig into that. But look, this chart here just shows the minimum income needed to buy a home in every single state. Look at that. In in Texas, you need over 100,000.

In Florida, it's higher than that, 115,000. The average median household income in Jacksonville, Florida, is 68,000. So, the only way people can buy is if they have a dual income, which you know is really really rare. Honestly, it's it's it's difficult in Florida, especially if you want to have kids.

I see why people are delaying their home purchases. It's just so unachievable to be able to purchase a home here and actually have some affordability. It did not. It was not this way 10 years ago.

The government has just been printing money and manipulating the housing market to drive prices higher. And it's unfortunate. I actually thought that the Fed was going to raise rates potentially even from here because we do see inflation coming up and yes, employment numbers have been becoming worse and worse and I get it. But the reality is everything is all-time highs and is why would the Fed cut rates when everything is at all-time highs and push this bubble even higher and make and bring back inflation?

It doesn't make sense to me. But you need the dual income to be able to purchase in today's market in many cases or you need to relocate from a very wealthy area. So in Florida, we see a lot of people come from California. We see a lot of people come from New York and New Jersey.

And those people relative to those areas, we look affordable and it's great for them and and they purchase cash and they don't even need the loan. So the interest rate doesn't matter and they negotiate because they're cash buyers and they get better deals. But this this chart is just pricing out the average person on the ground that actually lives and works here and has not made serious financial income. Now again, I referenced this earlier.

There's hope on the horizon for existing home sales in July 2025. I believe this is because sellers are finally capitulating to prices coming down and and they're acknowledging that and they're reducing their price. Here locally, we're seeing about 35% of people cut their listing price every single week. Okay, these numbers are crazy.

Of course, at a certain point, when you price your home correctly and it hits the magic number that the market will accept, you'll get three or four or five offers that day. It's pretty amazing. And the sellers are starting to understand this. They look at their neighbors and what their neighbors are doing.

They reduce it to a certain price, it goes real quickly. I think this is good for the market. Prices need to come down. We need to help out these younger generations and even older generations looking to downsize.

We need these prices to come down. And that's my fear if the Fed reduces rates too much this year. And next year it could cause an entire mess and kind of blow this balloon up a little bit too much in the future. I would rather see prices come down than see interest rates come down, which again is not advocating for my industry, but it is what it is.

And the foreclosure situation is just going to jump on top of that and bring prices down. So I think you know them finally processing these foreclosures through the VA, FHA, HUD, I think that's a good thing for the market. We need this inventory to come to the market to bring prices down. Existing home sales are at the lowest level since the great financial crisis.

So, I know a lot of agents out there, I get it. This might sound like doomsday messages over and over and over again. We are in a doomsday scenario when existing home sales are the lowest level since a, you know, real estate crisis over a decade ago. I mean, absolutely, it's important to be real about what's happening on the ground.

Acknowledge it so you can participate in changing the outcome for you and your business. When you just stick your head in the sand, it doesn't do anybody any favors. And that's exactly why we created this channel. So, we expect people to get real and then you'll you'll realize the results.

But the closer you are to reality, the better it's going to be for you. Home values dropped significantly. And I think these numbers are actually three months behind. I don't think that they're very accurate.

Even though it does say it's a July index, I think just the numbers on the the home sales are behind. We're seeing lower prices than what's being reported here. Markets with the biggest drop in home values over the last year. Florida is, you know, the epicenter of this thing.

Two in Texas and one Arizona. So, you can see just where the pain is happening. So, home values in Punta Gorda is awful. I mean, it's just getting crushed right now.

11.7% down um with the largest decline year overear for uh for a home value. Look at that. Orlando's there. Miami, Panama City, Palm Bay, Lakeland, Florida, which is close to me.

Deltona, Tampa, obviously Austin, Texas has also been getting cr It's worse than what this is showing year-over-year in a lot of cases. And if you're in a condo, it's definitely a lot worse than these numbers are showing right now. So again, the income is out of control that you need to be able to buy a house. We need the prices to come down.

That's another great chart that shows that. And all real estate assets act differently. Like right now we're seeing a ton of foreclosure activity and a ton of distress and pain in the commercial space, not just apartment buildings where they are overbuilding in a lot of situations, but also in US office space vacancy rate. And to think about this, back in the crisis of 2008, the vacancy rate was around 15%.

Now it's now we're above the vacancy rate from this these type of crisis. And it's so it could get a lot worse from here on out. And there might be an opportunity in a year or two from now once this all funnels through where prices actually come down to where reality is and where the real economy is that these might be good places to push to park money and convert that office space into something else if office is not the way to go and we are going to live just simply in a digital economy. Love to hear what your thoughts are on that.

But existing home sales inventory is just spiking still. So we have more sales in existing homes but we also have more inventory coming onto the market. So the the blue line is the year-over-year change in inventory. The red line is the months of supply of inventory.

And you can see that the pivot point happened in January 2022 when the Fed started raising interest rates. The Fed is driving the entire real estate market right now and interest rates are driving the entire market. We did another video that explored this. About 70% of price appreciation for real estate is due to interest rates coming down.

And they've been coming down the last 30 years and now they're pivoting the other way. I think this is a really healthy thing for the market long term. It's important to note that there's a ton of speculators and these speculators are getting hit left and right. We talk to them every single day.

I have hedge funds calling me saying, "I need to unload my 200 unit portfolio and they have so much deferred maintenance on these things. They're not very wellrun. Single family rental properties are hard to manage at scale." And you wouldn't be surprised to know that 21% of the homes in in Florida are owned by some sort of investor, right? Not necessarily institutional investor, but mom and pops as well.

They're trying to take advantage of the rising rents and the rising prices. And they did. And now it's reversing course and there's going to be distress for people who bought in 2022, 23, 24 if they bought an investment property at the new rates. And now they're seeing rents actually come down.

Their underwriting is a little bit flipped and the appreciation, they're not seeing it anymore. They're actually underwater in a lot of these things. Hopefully, they put a big percentage down. Now, looking forward to the future, the next two to three months, we're still seeing pending home sales fall.

We're at a very, very low level, again, lower than the great financial crisis. This is a huge problem. We hope that sellers will reduce their price to bring buyers back into the market and we see this pending home sales index move up. I don't see that happening from now until the end of the year.

It's more likely to be something that will pop up next year when sellers really start capitulating in the market and we see these foreclosures come onto the market. If I'm a seller right now, I'm thinking I want to race onto the market and and if I have to sell on the next year, I'd rather do it now than wait till next year. Personally, that's my opinion. The National Homebuilder Association's basically market index when you look at it by region, it's getting hit across the board, but most specifically in the south and the west.

The Northeast is still doing okay, not as bad as the other markets, but the builders are seeing issues because they have to provide the incentives on the financing side to drive the payment down for the buyers and they're having to slash prices in a lot of their community. A lot of these actual home builders are turning them into build to rent and then they're selling them at their cost to hedge funds to turn them into rentals and that's something that is absorbing supply which is really interesting and I think it's something to look at that will kind of change the dynamic of how much uh damage there will be from the peak to the bottom in terms of price declines because a lot of the inventory will get absorbed and turn into rentals but the more rentals there are the more that rent will come down right so there has to be migration to the state because we have a negative birth to death rate and we have to see that migration come to Florida. So, we need to see that the way we're going to get migration to come to Florida is simply because we're going to have an it's going to become affordable again. Now, the sales are suffering in July specifically in these areas, right?

Dallas is is getting hurt. Austin is down. Let's see. Jacksonville is down 22.4% from 2019.

Okay, so we're 22.4% 4% lower in the number of sales than we had in 2019. And if those of you who have been in the business in 2019, it was a hard year. Look at this in Maryland, Memphis. So, there are some areas in the Northeast that are still getting hit.

New Hampshire, but they're getting hit for different reasons. Sometimes they have a lack of supply in these Northeast areas that are actually pushing prices up still. So, we are not seeing this across the board nationally. It's starting to shift nationally, but it's not hasn't come across the entire board.

It's mostly the southeast, the sunb belt area in Arizona that are seeing the largest number of sales being an issue moving forward. This is another chart I just got to reiterate this. The new homes prices is two is 402,000 and the existing homes are 435,000. Of course, existing homes are in areas that are more attractive to live in than the new homes.

Usually the new homes are being built on the outskirts of of the communities and those where those mega communities are being built and they're building all the infrastructure around it and it can take 10 20 years for that infrastructure to be built out. So existing homes are more attractive in a lot of cases but you do have the upkeep, you do have the higher insurance costs, you do have the repair costs associated with it. So this is a weird conspiracy. I don't know if it's conspiracy or not.

Let me know what you think. But there's periods when to make money, not to make money. But this basically shows that we're in a midcycle here in that we have high prices, good times, and it's likely by 2032 prices will actually correct down here, moving down. And this is part of a cycle that's been basically made since the 1924.

It's like an 18-year type of cycle. Every single 18 years, we get a peak and then we go back down. It's interesting. Love to hear what you think about this type of theory, but it seems kind of on point at this point.

If you also the foreclosure crisis is going to be exacerbated especially in count condos and town homes when people lose their jobs and they live there. They're unable to pay those association fees and those fees then stack up and then have to be paid by other people who need to maintain that that association. So we're seeing the most pain right now especially in Florida on those condos. The existing homes.

I think that'll be later again next year. But the condos, we could see a serious crisis and they're getting crushed there and we could see a massive number of foreclosures come down the line. That'll be good for affordability for those. But again, those association fees can be pretty pricey.

It can be up to 1,200 up to $2,400 a month. And that's just I mean that's a mortgage payment for some people and it's out of control. Specifically, the South is seeing the inventory spike and it's most likely that we'll see the most number of foreclosures in the South. That's where we saw the most number of speculation happen and we're seeing the that's where we're seeing the most inventory rise.

We saw the most overbuilding in that area. So, Florida is rough. You can see this prices are already falling in Florida. You can see that Arizona, California, some areas of Colorado, Georgia, the prices are falling.

In Seattle, Raleigh, they're kind of likely to fall, but the Northeast again and areas of California are just absolutely crushing it still. And it's people from the Northeast don't even understand what we're talking about. But when you drive the streets here and you see house every third or fourth house being listed for sale, you will start to understand what we're talking about. And the stress is showing up is going to potentially be good for flippers down the line.

So, if you're an investor and you're thinking, "Oh, wow. There's like lots of mortgage delinquency, you want to prepare for what the next phase is going to be." You need to get the cash now and the resources now and start building your pipeline now for what could be coming down the line. You can see Florida has the year-over-year change in serious mortgage delinquency rates. Again, this is just the beginning because of those loan loss mitigation um programs suns setting, but obviously Florida is is the worst situated so far in terms of the delinquencies.

And I think this will be good for the flippers moving on. There's obviously more distress that'll create opportunity for them to pick up these houses and turn them around and sell them to other buyers. This is another concern that's been unbelievable. I mean there is so much consumer debt up there and this is why again I believe price it's better for prices to come down than to reduce rates and just continue to blow this bubble up.

The consumer is tapped out purchase loans with the debt to income ratio greater than 43% a lot of cases the maximum that you can borrow 65% 65% of FHA loans are people who are already loaded up with debt. So it's it's painful for them. Look at the VA right? It's 100% financing.

So, they're not even putting a lot of money down on these houses and they're getting a huge payment and they already have a ton of payments from the other debts that they have. So, same thing with credit card delinquencies. It's worse now than what we saw in the tech bubble. So, these are it's really bad.

Look at this. The student loan delinquencies are starting to skyrocket, right? In the South specifically, they're seeing a ton of delinquencies. This is going to impact first-time home borrowers ability to purchase, right?

It's going to slow them down. Prices really can't go up much from here in my opinion, especially in the South because the majority of buyers are completely priced out. 52 million people cannot even afford a $200,000 house in today's market. I mean, it's wages have to come up and prices need to come down.

So, what's going on in your market? I want to see, do you see more for sale signs in your area? Are people negotiating in your area? What is happening in your specific area?

I'd love to hear from you. Comment below, like the channel. Appreciate you watching and of course subscribe to my substack below in the description. I talk about things there I can't talk about on YouTube.

I look forward to connecting with you again soon. And if always if you need a real estate agent in your area who's a top agent who understands the market and is able to negotiate for you, reach out to me. I'm happy to connect you with the best of the