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Observations by a Beverly Hills Realtor, Endre Barath: Is there a ...

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Real Estate Agent with Berkshire Hathaway HomeServices California Properties 01238708

Observations by a Beverly Hills Realtor, Endre Barath: Is there a real estate foreclosure wave coming?

 I have seen headlines that try to promote this idea, that a New Wave of Foreclosures is coming our way. Personally, my take is, those who push this idea are attention seekers who do not know what they are talking about. Their headlines and posts remind me of the Bait & Click concept or maybe they have an ulterior motive??

Just to be clear I follow Altos Research & the Multiple Listings Data very closely and have not seen any indication of this “wave”. In addition, I listen to Steven Thomas who is a Quantitative Economics & Decision Scientists. If you do not follow him, you should, check out some of his pod cast, his focus is on California, and he is starting to expand his knowledge and wisdom to other states. Needless to say, he eats and sleeps economic data. I will share some of his charts and clear as day there is no Foreclosure Wave coming or existing in the near future.

www.endrebarath.com

If you look at the above chart you will notice that these are Properties that were filed for Foreclosure in the US. Please, focus on the numbers between 2005-2007 these were the pre-Great Recession statistics, then look at the numbers from 2022 and 2023. Disregard the 2019-2021 figures, because those were due to the Pandemic Moratorium on Foreclosures, and it skewed the numbers.

If you dig deeper, you will realize that a great part of the Great Recession was caused by lenders giving loans to buyers who would not be able to perform on these loans. I used to say pre–Great Recession what are they using the Mirror test? I used to joke I could get a loan for my dog. Now with that said, if you look at the photo below, you will notice the borrowers who had 660 FICO score or less pre-Great Recession and then look at the numbers today.  Quite the difference, Lenders have tightened up on giving out loans to potential borrowers who would not be able to perform. This is again a huge difference; hence my point is that we have homeowners who are financially in a good place. Low interest rates, good credit ratings and good income, hence the few foreclosures. Let me say again I do not see a Foreclosure Wave in the horizon.

www.endrebarath.com

Now those of you who say, well good what about inflation will that not hurt the homeowners and create foreclosures? The reality is that most homeowners have huge equity in their homes and the interest rates are very low, hence it is a protection from financial hardship. It is almost like a shield from inflation. They are comfortably paying their very low mortgages and have good income and are not stressing about inflation. The flip side is there is no reason for them to move hence fewer listings are on the market.

 

www.endrebarath.com

 

Wishing you a safe and healthy life and I look forward to your comments. If you are looking for a knowledgeable, focused and goal-oriented Realtor in the Beverly Hills area who will help you achieve your Real Estate goals, please reach out to me directly! If you are looking for a pet friendly Beverly Hills Realtor who can handle and sell the most difficult properties that no one else could, please reach out to me directly!! If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 ( m) homes@endrebarath.com or visit one of my websites at https://www.endrebarath.com I contribute a portion of my commission to local animal rescue organizations. Endre Barath, Jr. Realtor at Berkshire Hathaway HomeServices California Properties DRE#01238708

 

Comments (49)

Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

I saw this post a couple of days ago and was distracted before I could leave a comment, Endre! 

I'm with you 100% and have been beating the same drum for nearly 2 years now. I don't understand why the masses follow the negativity that is projected by those who don't have boots on the ground in our business. Boggles the mind! As for the data, now this is data which we DO share from LA to Charlotte! (Unlike your sales prices!! LOL)

Feb 19, 2024 06:45 AM
Edward Gilmartin
CRE - Boston, MA

There were a lot of Liar Loans given out prior to 2009. It was all part of the Bush Ownership Economy. I do think a lot of buyers are waiting for 3% mortgage rates to return. I’m afraid the 6% mortgage is here to stay

Feb 19, 2024 06:50 AM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

I am always puzzled when I see such headlines, Endre. I agree, it's purely attention-grabbing with no substance. The proof is in the numbers. The charts clearly show that there's no wave to speak of. Too many people are sitting pretty on their sub-4 and sub-3% mortgages and on a nice chunk of equity. Almost 30% of purchases are all cash, at least in my market. That's a huge chunk of people who don't even have a mortgagor who could foreclose on them. 

Feb 19, 2024 07:16 AM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

It's all a bunch of hooey Endre!  Everyone once in awhile somebody wants some attention and starts shouting foreclosures, foreclosures coming - are they selling seminars too?  Could be.

We have our local mathematicians that keep track of our market and have for years - and years.  I trust their numbers and always look forward to hearing them speak, once a month so I can keep up with the 'real' truth. Our 'local neighborhood' market is  moving fast, homes go pending quickly and people want to live in the area so it's game on.

Feb 19, 2024 09:19 AM
Matthew Sturkie, CRS, GRI 909-969-3805
Action Realty - Apple Valley, CA
CRS, GRI 909-969-3805

Great Post! Same thing out here in the Inland Empire. No wave of foreclosures. I also think the increase in 2022 and 2023 is pandemic related. Numbers were suppressed by moratoriums during the pandemic and some of the 2022 and 2023 foreclosures were either a result of the pandemic or delayed because of the pandemic. I recently spoke with an investor that tracks defaults in the four-county area of Riverside, San Bernardino, Los Angeles, and Orange counties and he also says there is no wave of defaults or foreclosures.  

Feb 19, 2024 09:36 AM
Gloria Todor
Premier Property Sales & Rentals - Springfield, PA
& Doug Durren (484) 431-3686 in SE PA

Good post Endre.  There have been threats of this for a while now.  Luckily it does not seem to be happening in large numbers like what happened back in the early part of this century.  Happy for that!

Feb 19, 2024 03:06 PM
Mike Tolj
Tolj Commercial Real Estate - Los Angeles, CA
Commercial Real Estate Without the Stress!

Endre, Great job on your market insights!  I'm interested to see how things play out when loans reset or sellers need to refinance at higher rates.

Feb 19, 2024 04:01 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Endre:

I've seen no indications of a foreclosure wave either. Or of the bubble that we see mentioned occasionally in the media that's on the way.

Jeff

Feb 19, 2024 04:45 PM
Paddy Deighan MBA JD PhD
http://www.medicalandspaconsulting.com - Vail, CO
Paddy Deighan J.D. Ph.D

We have been hearing about this wave of foreclosures for many years. Yet it never has happened. Sometimes technical analysis is not a true indication. Buyers will always buy quality and sellers will always sell at reasonable prices

Feb 19, 2024 06:08 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Brian England appreciate your kind words, Endre

Feb 19, 2024 10:12 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Kat Palmiotti  not the first time we are on the same page, Endre

Feb 19, 2024 10:13 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Wayne Martin  could not have said it better, thank you for your input, Endre

Feb 19, 2024 10:14 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Carol Williams  we need to clarify and explain numbers, the key is to have the real statistics and not just talk from well you know, Endre

Feb 19, 2024 10:16 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Patricia Feager, MBA, CRS, GRI,MRP  thank you for your kind comment Endre

Feb 19, 2024 10:17 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400  would you believe the first statistics chart was for the entire US from ATTOM

Feb 19, 2024 10:19 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Leanne Smith  loved your comment it all goes to show that the Government was and is part of the problem, Endre

Feb 19, 2024 10:21 PM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

I can remember a lender from the prerecession era that made loans in which the borrower could opt to make a monthly payment that was interest only, but less than the interest accrued each month. The loan got larger as time went by.

That lender is no longer in business having gone out of business as a result of the many foreclosures which led into the difficult financial times that followed.

Feb 20, 2024 03:27 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Endre I definitely think you’re way more than you’ve seen. Love and light and all the best.l

Feb 21, 2024 09:54 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Things have held up overall despite inflation and I think the trend might continue for a good bit.

Feb 22, 2024 07:01 AM
Philip A. Raices
Turn Key Real Estate - Great Neck, NY
1 of the Most Knowledgeable Brokers on the Net!

Good afternoon Endre,

Superb column and true the numbers don't show any trend.  However, if you check what happened from 1926 to 1929 after WWI, there are some very similar characteristics.  I also realize that we are not in a 2008 bubble with inventory, which generally causes a major issue.  However, I follow Warren Buffet's market indicator as well as other stats and other very intelligent and intuitive people e.g. Ray Dalio, Peter Schiff, Teeka Tiwari, and sometimes Robert Kiyosaki, (who is a bit too extreme in his thoughts and ideas), as well as Michael Saylor (Crypto Billionaire, who advised Alon Musk to purchase 1.5 billion of Bitcoin back in Feb 2021 and earned him 270 million on paper and still owns his Bitcoin, Ethereium and Doge coin holdings), John (Jack) Bogle, Cathie Wood, Peter Lynch,  John Templeton, Jim Rogers (who resides in China with his teenage twin daughters), Jeremy Grantham and Mark Andresian to name a few.   Warren Buffet's indicators do not show a very comfortable position comparing the stock market value growing at a bubble pace compared with where the U.S. economy is currently.  We have a 33 Trillion dollar National Debt, 1.7 trillion in public student loan debt, and 130 billion in private student loan debt.  The severe unrest around the Globe, Ukraine, Israel, Hamas, al-Qa'ida, Houthis, attacking the ships to stop and impede their successful transportation of goods around the Globe, Hezbollah, and even in Africa, Al-Shabaab and, all the other splinter terrorist groups; and even within our own country, where we probably have more home-grown terrorists than any other place on earth.  

We must be cognizant of what is going on and not stay in a "bubble world" where everything is just "hunky Dory."  As they say, "One's best offense is a strong defense." 

I live in Great Neck, NY a very high-end town on Long Island.  I observe regularly all the new stores that open as well as those that close; not only in my town but many others throughout Long Island and  NYC.  It's a very tough town to survive in and everyone that comes to try to open a business thinks it's a town paved with opportunity and Gold!  It is much more challenging than one might realize after a while when it comes to satisfying the very picky, discerning, and sometimes over-the-top requirements to satisfy the consumers that reside here.  The sometimes rudeness and lack of empathy and caring for a new business goes beyond what a merchant might expect when beginning their business here.  Moreover, the excessive cost of rent, tax increases, labor, utilities, merchandise, etc. makes just surviving to earn a living much more demanding than one might realize.

I am not as much concerned with my business as I have been in Real Estate for 42+ years (12 as an investor and 30 as a Broker).  I am branded and successfully represented here, throughout the U.S. as well as abroad.  However, the majority of offices throughout the U.S. are mostly single entrepreneurs by themselves or with 1-5 agents at most.  I am very concerned for the U.S. economy over the next 1-5 years and its impact on our citizens and consumers.

The industry has lost 100,000+ agents over the last year and I believe that number isn't correct and is much higher when you add those that are not Realtors and part of an MLS.  Those numbers will continue to increase as the shakeout continues; due to the high interest rates, low inventory, those that have previously refinanced, etc.  This has made doing business and making deals the most problematic for those who are not at the top of their game and are not expert listing agents. More crucial is due to a lack of continually updating their skill set and mainly treating their businesses as 2nd jobs.  Almost 50% of licensed agents have jobs and have had no previous experience or understanding of how to market, brand themselves, and run a profitable business. Most importantly, they don't have the required and necessary motivation to compete or have the drive to thrive and excel in the industry.   I firmly believe that is the number one reason for their failure and dropping out.

Those of us who are top producers and have the will to survive and succeed will always be in the business.  However, the median age of an agent today is 55.  I believe going forward it just might continue to rise as most millennials, GenX and GenZ probably will not be in a financial position to enter the business, unless they have the financial wherewithal to survive as so many have excessive debt that precludes them from going into the real estate business, let alone be able to buy their 1st home.  I truly wonder where the capable and qualified purchasers will be over the next 10-30 years?  Inventory may get to a point, where prices will have to moderate and come down from the highs that we are experiencing today.  How will AI affect wages and salaries enabling a minority (not a majority) to be able to buy a home?  All my questions will eventually come to fruition and be determined and answered; but not sure I'll be around.  However, your children and grandchildren hopefully will be and I hope, for sure of a more positive outcome.  My rant wasn't meant to be a negative one, although it may seem that way; but more of a realistic approach to what I am concerned about.  I am an upbeat individual 99% of the time and no matter what happens I always keep a stiff upper lip and strive to do well; no matter what curve balls the market throws me.  Most critical and crucial,  is the support of my wife of 48 years, my kids and grandchildren as well as my client sellers, investors, purchasers, renters, and lessees of residential and commercial properties.

Feb 25, 2024 12:35 PM