The year 2022 is upon us and now is a good time to discuss where things may be headed in Bankruptcy and Real Estate in Washington State in 2022. I was able to discuss the outlook for Bankruptcy and Real estate in 2022 on 1150AM KKNW recently and you can listen to the show here:
Will Bankruptcy Filings Increase in 2022?
Bankruptcy filings are at near record lows. This is may be due to government stimulus, federal forbearance with regards to mortgage payments and mortgage loans being modified post forbearance to put the arrears on the back end of a loan and possibly extend out the term of the loan. Additionally, consumers have not been spending as much due to Covid-19 shut downs as gathering spots like restaurants and recreational activities were shut down for a period of time.
In 2022 federal stimulus payments and additional unemployment payments look to be things of the past and consumers will now have to return to the workforce in order to pay bills. Additionally, with forbearances and foreclosure moratoriums ending I would anticipate chapter 13 bankruptcy filings to increase, although most professionals do not believe this will happen all at once as mortgage lenders have built up inventory that they will need to work through and start foreclosing and processing over time.
In Washington State, the new homestead exemption was passed in 2021 to increase the amount of protection to the county median price which is a significant improvement over the $125,000 exemption it was previously. For example, in King County currently, debtors can protect up to $729,600 which will likely go up in the near future for 2022 based on more recent home values in the area. This may cause future debtors to potentially consider filing chapter 7 bankruptcy with less of a risk of losing a home if they were to file a bankruptcy.
What will Happen with Seattle Area Real Estate Market?
There are some who believe a real estate crash is inevitable with the skyrocketing prices skyrocketing nationally. With that said, Windermere’s Chief economist Matthew Gardner has projected a steady 7% increase in prices nationally for 2022. Of course the area in which you live will play into whether a particular market continues to see home prices rise. With all the grown and building in the Seattle metro area, I would guess that our community will continue to see home values rise, although it may be at a slower pace than we saw in 2021. With all the building and tech workers and supporting businesses further moving into the area, it seems like there is no shortage of high earning workers moving to town to further boost the real estate market in our area. Compared to prices in the Bay area of San Francisco and supporting communities where many people relocate from, Seattle may seem like it is affordable in comparison.
If you are looking to sell a property, 2022 may be the year for you with a shortage in new listings on the market, competition is fierce for buyers, with many properties selling for way over asking. If you are a buyer, you had better be prepared to keep your expectations in check, you may have to waive inspections or pre-inspect and be prepared to escalate how high you are willing to pay in order to win the home you are looking to purchase. Additionally, you may have to lower expectations for what you are getting for the amount you are spending inf you need a home now, with home prices likely to continue to move up. Mortgage interest rates are also likely to increase throughout the year and beyond, so the price you pay for your home is going to continue to escalate barring a market meltdown which of course is never out of the question, although most seem to think it will be the stock market or financial investments that would be hardest, other than real estate.
Distressed properties facing foreclosure may hit the market soon, but they will not be turnkey and may need a lot of work. Additionally, foreclosure sales may be less common as homeowners may choose to list their properties before a foreclosure sale actually happens to receive equity from their properties and avoid having a foreclosure sale on their record. It is better to list a proper, rather than let it be foreclosed on if you plan to own real estate in the future as a foreclose goes on your record, making it difficult to obtain a home loan. You may also solicit offers from real estate investors in a cash for keys situation, while convenient, it won’t offer the most return on your investment.
If you live in Washington State and have questions about bankruptcy or buying and selling real estate, give Symmes Law Group a call at 206-682-7975 or contact us to get the representation you need.
