“If that changes and there is a huge unemployment situation, then perhaps defaults will start, and defaults will be followed by foreclosures. As long as we can continue to make fixed payments, we do not believe there is any significant risk of default or foreclosure at this time.”
According to the latest data from the US Bureau of Labor Statistics, the unemployment rate rose slightly from 3.5% to 3.7% in October, while the number of jobs increased slightly by 261,000.
Lenders initiated the foreclosure process on a total of 67,249 properties nationwide in the third quarter, a massive 167% increase from a year ago, according to a recent report from real estate data firm ATTOM. However, this is still below pre-pandemic levels.
But Stroud said if the Fed can keep inflation in check, it will turn away from aggressive rate hikes, predicting economic relief in the second half of 2023. This will “crush demand” for housing.