I’m sure most of you are aware of the sharply rising prices for consumer goods. Everything from food to fuel to lumber has risen in price over the last few months.
This boys and girls is called inflation and it can be laid directly at the feet of the Biden administration. A quick and dirty explanation of inflation is this: there are too many dollars chasing too few goods and sevices. In other words, the Fed is printing too much new money.
The consumer price index, a measurement of how much the cost increases or decreases in a specific period, has had its highest yearly increase since 2008. The amount paid for goods and services have gone up by 5% this year.
Unfortunately, inflation isn’t the only thing we need to worry about. As many as 8 million households are on the brink of eviction/foreclosure. This is due to covid related loan forebearance and a rental eviction moratorium for federally subsidized housing.
According to a new Harvard study, more than 2 million homes are in eminent danger of facing foreclosure. Most lenders have been blocked from filing suit to force payment or start foreclosure proceedings due to the pandemic. Now, with the lifting of restrictions, those actions will start ot go forward again, putting all those homeowners who are in default at risk of losing their homes.
The rental situation is worse, with the federal government — based on dubious legal authority — imposing an eviction “moratorium” during the pandemic, allowing renters to stop paying their rent safe in the knowledge that their landlords couldn’t do anything about it. Census data puts the number of renters behind on their rent around 6 million.
The CDC-issued order halting some evictions, and federal limitations on foreclosures for federally-backed housing, both expire on June 30.
With the caveat that I am not a home finance/rental market expert here’s what I see coming. At first there will be a trickle of evictions/foreclosures. Those will be the ones that were chronically in default prior to the pandemic. That trickle will gain velocity as people who decided to skip a few payments during the pandemic start to realize that they can’t catch up, and they get evicted/ foreclosed. Finally, I expect a full on mortgage crisis as banks and lenders start to realize they can file and process claims for foreclosure in much the same way as they did before.