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Why We Shouldn’t Worry About Foreclosures

There are three main reasons we don’t have to worry about foreclosures.

Are we in a bubble? What will foreclosures do to our market? I’m sure this is on the top of everyone’s minds right now. So let’s have a discussion about it. I honestly believe that foreclosures will not be that big of a deal and there are a few reasons why:

1. Interest rates are low and appreciation is still high. If they’re facing foreclosure, they could instead sell their home and still make a premium. If their home would be foreclosed, instead they could sell their home and still make a premium.

I think we will stay pretty steady, even if we see some houses go into delinquency.

2. Rent rates are rising. A house that was rented for $1,000 a month last year is renting for $1,400 this year. A lot of this increase comes from gentrification, but it supports the value of the home because investors know they could buy a home and rent it for a premium, which keeps the demand high.

3. Loan rates could be better. With interest rates as low as they are today, they could get a loan modification and end up with a better rate than when they fell into delinquency. However, this comes with the caveat of loan modification being difficult.

Between these three factors, I think we will stay pretty steady even if we see some houses go into delinquency, so stay tuned as it starts to happen. If you have questions about this or any other real estate topic, feel free to give me a call. I’d love to help you out.

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Caitie Neal

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