Why the Lehigh Valley will soon see a flood of foreclosures – The Morning Call

Dale Kessler, a realtor who specializes in selling foreclosed homes, thinks business will pick up this year.

With the moratorium on foreclosures ending last year, Kessler, the CEO of Realty 365 in Allentown, is seeing a trickle turn into a flood as a backlog of deals begins to wind down. He said the numbers could run into the hundreds.

“I’m getting seizures a little more consistently than I’ve had for the past two years,” Kessler said. “In the third and fourth quarters, we should see a bit more upside. And then, once we get to the first and second quarters of next year, we should start to see a bit more steady flow.

The Lehigh Valley numbers showed a gradual decline over the past five years, which continued to decline in 2022.

A report by Greater Lehigh Valley Realtors, using data from the Greater Lehigh Valley Multiple Listing Service, indicates that foreclosed/distressed homes have been a commonplace part of the Valley market for several years, and that there has been a steady decline percentage in the market. .

In 2021, distressed sales accounted for just 0.3% of home sales in the Lehigh Valley. That compares to 0.5% in 2019, the last full year before the COVID pandemic, and 1.4% in 2017.

The report said government and lender forbearance efforts continued through much of 2021, which limited distressed selling activity. In 2021, the percentage of completed sales that were either a foreclosure or a short sale decreased to 11.1%.

“Foreclosure and short selling activity could increase in 2022, although the strong equity gains seen by most owners in recent years will help limit the number of distressed sales,” the report said.

So far this year, year-over-year sales have continued to decline. Between January and March, there were 13 such sales, compared to 17 in the first three months of 2021. This represents approximately 1% of the market. For March, there were five such sales, compared to six in March 2021.

“There’s such a backlog of foreclosures,” Kessler said. “The wave we are going to see is not new. These are the ones that were probably already underway when the pandemic hit and just couldn’t be crossed. »

To help homeowners whose income may have been affected by the pandemic, the federal government has issued a moratorium on foreclosures. This expired on July 31, 2021, and the Consumer Financial Protection Bureau’s Enhanced Mortgage Service Guidelines ended on January 1.

GLVR’s report shows that overall new listings fell slightly over the year, down 1.2% to 849, while pending sales fell 3% to 715 and closed sales increased by 2.7% to 572. The median sell price in the Valley, however, is up. 16.7% to $280,000, while the average selling price is up 17.6% to $318,206.

Nationally, the number of foreclosures has increased.

In its recently released report for the first quarter of 2022, ATTOM, which collects foreclosure data, and Realty Trac, revealed 78,271 US properties with foreclosure, up 39% from the previous quarter and 132% from compared to a year ago.

In the US, ATTOM reported 33,333 US properties with foreclosure filings in March, up 29% from the previous month and 181% from a year ago – the 11th consecutive month with an increase year-over-year foreclosure activity in the United States.

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Additionally, the Federal Reserve Bank of Philadelphia estimated that 2.73 million mortgages nationwide are either forborne or in arrears; about 780,000 of them are part of federal forbearance plans that will soon expire.

Rick Sharga, executive vice president of market intelligence for ATTOM, said foreclosures were returning to normal levels.

“But even with the sharp year-on-year increase in foreclosures and bank foreclosures,” Sharga said in a statement, “foreclosure activity is still only operating at around 57% of what it was in the first quarter of 2020, the last quarter before the government implemented consumer protection programs due to the pandemic.

Kessler said the national numbers are growing faster than Pennsylvania’s because states such as Texas are more aggressive in closing its records.

He added that what happens in other states is an indicator of what will happen in the Lehigh Valley and the rest of Pennsylvania.

“We generally tend to be two to three years behind Arizona, California and Florida,” Kessler said. “These are good indicators of what is to come. So when we had the huge foreclosure boom, Florida, Callie and Arizona were really hot and heavy, two to three years before we were hot and heavy. And we were able to ride ours much longer.

Morning Call reporter Evan Jones can be reached at [email protected].

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