WEBVTT
00:00:00.033 --> 00:23:21.333
there's been a lot of discussion about pre foreclosures lately yeah pre foreclosures are rising across the country we're in a consumer credit crisis right now Florida is the epicenter Texas obviously is an issue we're seeing it rise in call call Colorado Arizona Washington State what we've seen is basically a backlog of all of this distress for the last five years and now it's starting to come to fruition as we see prices come down you're going to see more distress show up on the preforeclosure side welcome back everyone I'm Tim Jones with foreclosure.com I'm excited to introduce introduce our guest today John Brooks John thank you for taking the time to speak with us today yeah excited to be here well John has his boots on the ground up in Northeast Florida and is here to break down where pre foreclosures are rising what's driving them and what to watch for next um John before we we jump in can you give everyone a brief background of your real estate experience yeah sure and I'll just give you a brief overview you know I started off as a quant in a economics and statistics group so I'm very big into data and analytics and understanding the reports really matter and the footnotes always matter and the assumptions always matter which has got me looking at the real estate market from a different perspective then I became a real estate investment banker at a Wall Street bank and I did the underwriting for billions of dollars worth of single family rental loans for the aggregators right American Homes 4 rent progress etcetera uh and then I became a real estate agent uh and switch gears and I started to you know get out of the ivory tower view and and actually came in and saw what was happening on the ground around I became the No. 1 real estate agent in my market Jacksonville Florida built a team uh sold a ton of real estate Learned what buyers and sellers are going through throughout the transaction and their lifestyles what the issues are to them then I opened my own brokerage in 2020 it took off we we've got over 300 agents and now I talk to agents across Florida and in Georgia title company mortgage stuff all of it in between we see it we analyze it and now I have a housing website move with momentum.com that you know focuses on real estate data and what is actually happening in the market because the headlines are saying one thing and what's happening on the ground is almost the exact opposite wow hahaha well thank you for that high level overview I mean that's quite impressive what you've accomplished in a relatively short period of time so um and I'm excited to talk to you cause I feel like with your experience on both looking at the analytics analytics the data as well as you know actually doing this in practice and helping with your brokerage and all of your agents so um let's dive in OK um there's been a lot of discussion about pre foreclosures lately can you explain briefly what a pre foreclosure is and why more people are hearing about them today yeah pre foreclosures are rising across the country for various reasons but simplify a pre foreclosure is basically when a bank when when a borrower is delinquent on a loan and the bank has issued what we call lis pendens which is basically a notice of the foreclosure lawsuit to reclaim the property now usually they're delinquent you can only issue a pre foreclosure after their hundred and twenty days but it I think it depends on the state as well so there's certain rules you have to focus on but after hundred twenty days the bank will decide okay they're delinquent do I go through the foreclosure process do I sell the loan to somebody else do I approve a short sale do I work with the borrower to do a loan modification um but these this stress underneath the surface is rising off of record low levels because of what we had previously were workout programs that were designed during the covid time frame because of so much job loss to keep people in their homes but they kept these programs going and still have them going they made them a little bit more challenging as of October 2025 so the reason why we've seen record low default rates and um everything is because of the workout programs from the distress basically borrowers can miss their payment and lump it on the back of of their mortgage and basically do a mini loan modification this creates a lot of title issues when they go to sell because they have to make sure that they can actually find everything but we see this on a day to day basis and so what we've seen is basically a backlog of all of this distress for the last five years and now it's starting to come to fruition because it wasn't being pursued previously due to these you know extended covid situations that were meant for crisis periods but lasted way long beyond that yeah no that brings and and and it's interesting because from a national perspective it it you're you're seeing you know both ends um are do you think pre foreclosures are increasing nationwide or is it more in certain areas states metro areas what are you seeing yeah so I mean Florida is the epicenter Texas obviously is an issue we're seeing it rise in Colorado Arizona Washington State so it's no longer just the Sun Belt it is spreading in areas that had rapid growth of price appreciation and now that we're seeing a little bit different of a correction start to come into play a little bit more shakiness on the job market we're starting to see people actually experience the distress specifically the people who purchased their home in new construction communities and didn't understand that their taxes were going to go up so much their payment was gonna go up the insurance was gonna go up and they're locked into these houses with these low interest rates life event happens they can't move out they're stuck because now they're competing against the builder who's offering 50 thousand dollar credit and 20 thousand dollar upgrade a new golf cart like they're begging basically you know people to buy these houses so they're stuck and they're turning into short sales they're turning into pre foreclosures and that's part of the reason why we're seeing it in Florida is there's just so much new construction that you're competing with and now prices are coming down yeah well so from a local economic factors are are are driving higher preforeclosures in some markets remain relatively stable or some markets are doing just fine it it depends on where the correction is and a lot of this is based on jobs as well cause you know you know selling if you can sell your house and you have equity in your house then it's not a problem right so the people who are fine are the those who purchased before 2020 even 2021 those people are usually okay the riskiest cohort of people that we're seeing are the folks who purchased in the Sun Belt markets in the oversupplied builder areas or competing with builder areas at record prices and now prices have come down 7 10 12% they don't have equity they're paying FHA and VA loans which have very low down payments so they're immediately underwater on these houses after immediately when they close and then the prices have come down so they don't have a way to wiggle out of this if they can't afford their payments they can't just walk away and sell it so that's where these pre foreclosures start to pop up so consumer debt credit card delinquency FHA loan stress all those things I've seen you mention in in previous videos those are the financial pressures influencing today's foreclosure trends you think I think they're leading indicators right when somebody stops paying their credit card they stop paying their car loan they stop paying their student loan a lot of people they keep making their mortgage payments it's on autopay all that kind of stuff right they don't have to think about it but you know we're in a consumer credit crisis right now we're not necessarily in a real estate crisis the consumers generally completely maxed out you know 78% of Americans are living paycheck to paycheck they're they're one job loss away from financial strain and if they own a house with a payment that keeps going up every single year right cause everybody thinks their payment is fixed it's not fixed uh that you know they're they're more their interest in principal payments fixed but not the taxes insurance then they have to consider the HOA fees if they have if condos are a huge issue right now um and then the maintenance and repair costs are significant to keep to upkeep the house so people are not um feeling really good consumer sentiments at a all time record low which is in contrast with the stock market so I like to say you know we have a K shaped economy the top 10% who own assets are crushing it and the bottom 80% are really struggling in this market environment and it will start to show up in the housing market as time goes on now you have to understand this isn't something that's going to happen overnight there's no this is going to take years and years to play out Florida is a judicial state these foreclosures have to go through the court system the banks are not prepared they are not staffed up to work these short sales and foreclosures but they're starting to ramp up because they're seeing the acceleration yeah no I I definitely know what you mean by just the the crazy demand that happened during Covid I mean down here in Southeast Florida it was it was nuts I I call it FOMO buying because you yeah people weren't even really trying they they just wanted to put an offer in and time people were putting offer in you couldn't do it fast enough it seemed like you know I was showing going to houses and all of a sudden 60 people are showing up to a one place you're like waiting this is a little this is a little overheated right now and and I know a lot of those people weren't anticipating that increase in taxes and definitely the insurance after the last couple storms over the few years how that's increased and yeah I know I know a lot of people are are kind of second guessing whether the home purchase was the best I best uh best choice at that time so I I know you mentioned Florida and Texas but which housing markets are are you watching most I guess closely over the next six to 12 months again I I know it's gonna take a couple years potentially to play out but what uh what markets are you keeping an eye on you think could be even worse you know I'm looking at the northeast because one of the most important things that's happening is the change in my migration patterns we're already seeing a lot of people from the northeast they used to come to the Sunbelt areas right like migration to Florida was tremendous we had over 300,000 net migrants uh to to Florida now we're down to 22,000 and instead of them coming to Florida because now Florida is really unaffordable to the regular American they're going to the Midwest so we're seeing flows change I'm also concerned about the northeast because they have an aging population they have aging inventory they haven't built and so prices have kept up and so you know a lot of people are looking for affordability they're they're deciding where they're going to move their family and start their life based on where the wages make sense against the shelter cost cause the shelter cost is one of their largest expenses and they're going out to the Midwest and they're not coming to the Sun Belt as much anymore and so we're gonna have we're gonna have to see a correction right because we have 22% of our population here over 62 years old and so and you know sadly people are gonna pass away this is the demographics is destiny conversation and there who is going to replace these people in 20 30 years because birth rates are declining so unless we have some sort of mass immigration to fill the spots and fill these houses and we've already got a ton of vacant houses who is going to be the next buyer at today's prices when it's already so unaffordable to the locals the only people left remaining buying right now in in the majority is like dual income high earning families who are locals that can make their you know scrub their nickels together and buy a house cause we see it every day or it's very wealthy people from the northeast or out west who've already made their money and they're relocating to Florida for tax advantages for homestead advantages um and they wanna they wanna live the Florida lifestyle they already have their money it doesn't matter to them and that's where we talk again about the K shaped economy the locals are priced out so where this is changing migration patterns and the other issue is that it's so unaffordable that people are doubling up on houses and they're they're basically buying them together they're moving back in with their parents they're you know doubling up we weren't seeing this kind of trend you know before the prices just got so unaffordable so I think this is gonna change the dynamic between buyers and sellers moving forward and as we see prices come down you're going to see more distress show up on the pre foreclosure side because of the demand change and if we see interest rates move up further from here it's going to be devastating for the demand side and so we've already seen transactions crash they are down 35% I know a lot of people say okay well you know prices haven't come down no they haven't prices are sticky real estate is an illiquid asset class it takes time for this to play out but the first step is transaction stall we're seeing pendings down another 25% year over year and at a certain point the inventory will stack up and we will continue we will see the distress filter through if there's some sort of job loss uh type of event that happens or some sort of credit market event which already is starting to happen right Besant stepped in with $4 billion you know to to try to help the the housing market by buying these 30 year Treasury bonds to keep rates lower the market didn't like that that's already popped back up so the government will do whatever they can to delay the distress as long as humanly possible but the markets eventually gonna catch up with them no that's a great points I feel like the inventory is something you really gotta keep your eyes on because you know some of those pandemic markets in the beginning like Austin and Southeast Florida Miami that had their inventory dropped you know 60 70% now they're going through the roof but it's interesting how the northeast they're still kind of tighten inventory I was just in New Jersey not too long ago and they're still seeing some appreciation in that area because the inventory is so low and they didn't build yeah they didn't build the scarcity aspect of it I feel like that has something to do with it um where down here every they're building everywhere you know almost probably overbuilding maybe some will say definitely overbuilding it's it's completely overbuilt and they're overbuilding multifamily and I can prove it because we're seeing rental rates come down pretty significantly 10 to 20% wow in these areas that are overbuilt and that changes the calculus for the investors where now they have to offer less as a backstop because they can't get the rental rates that they were getting previously that's a that's a good point so diving back into preforeclosures and foreclosures so many people assume every preforeclosure becomes a foreclosure can you explain what typically happens after a property enters preforeclosure and why buyers should understand the different outcomes yeah so the seller gets notified that the house is now basically in litigation with the bank and the banks starting the process to take the house back through the courts and ultimately it there's like so many different things that can happen we've actually bought from foreclosure auction so we can see that even up until the day of the foreclosure auction it doesn't go to foreclosure auction for whatever reason they find a solution they do a payoff they declare bankruptcy they delay delay delay they file a countersuit for whatever reason the banks doesn't care honestly they just wanna get their money back as fast as possible and minimize the amount of losses a lot of these governments uh loans too if they're you know Freddie Fannie if they're FHA VA they're backed by the US taxpayer there's funds that's why you pay some of these premiums at the closing table to fill these things so ultimately like when the when we give out all these bad loans if it if it overflows the taxpayer ends up paying for for for the situation but for for buyers looking at pre foreclosures it's just an indicator that the seller is in distress um or they're they're just in distress not even that they're selling it just takes so long for the courts to process this through that doesn't necessarily mean that you're going to get a discount now some of these will turn into short sales but you have to uh the short sale process is pretty interesting you have to document your distress for several months you have to be talking to your bank you have to get approval and short sales you know can go anywhere from six months to two years to get approved that that just uh you know it doesn't even include getting the price approved so the bank is going to go do what's called a BPO a broker's price opinion on the house and determine the market value of it and when they receive offers on a quarterly basis there's asset managers that sit and review those offers and see what they're going to approve so you know it doesn't even mean that you're going to get the price that you offer a lot of the times you don't the market hasn't fallen that much yet so the banks really don't have the motivation to accept a short sale yeah so so you know I think when you're thinking about it from a buyer you think oh they're in distress I'm gonna get this wicked deal that's just not the case at least not right now not until there's really widespread short sales and foreclosures where the banks just want the liquidity I don't see that happening um anytime soon definitely not in the next year or so but I I can definitely see the number of short sales and pre foreclosures rising that's interesting yeah no that brings up a great point because I know back in like the last um housing recession um there the property appreciation fell so quickly that the most of the properties were underwater where after Covid there was a big increase in appreciation so even if they're coming down so that really kind of puts the pressure on the people that bought recently it seems like people who bought in the last couple years who again I think FOMO bought into you know thinking they're never gonna be able to buy a house again if they don't buy it this day well we were pitched that there was a by the media the mainstream media that there is a housing shortage which just was never the case I know this because I was selling in 2019 and we did not have a shortage of housing in 2019 what happened was we had a demand shock because of Covid where we had all these people relocate at the same time yeah a a a 10 year fast forward of demand into three years is not a shortage it's just a demand shock now those pull forward buyers are not there and there's a gap meanwhile the builders built thinking that the migration patterns would continue at that high rate which is why we're now seeing the over supply in certain markets again it's not everywhere in Florida it's pockets but once a pocket hits it really distresses the areas around that pocket in a lot of ways um and to reference you know the time frame that this happens right 2006 is when we started to see prices decline and we didn't really hit bottom until 2,012 that's a six year period this and that was with forced selling from the banks through the government right so this is something like this could be a decade long type of correction uh period and you know Lehman didn't happen until 2008 right so these type of things you can see them coming far in advance that's why it's really hard to time when things will really accelerate I'm not gonna even stick my hat in the ring on that because you I'm just gonna be whatever I say is going to be wrong yeah because you don't know how much government intervention is gonna be you don't know where interest rates are going to be and the government will step in the government wants to maintain their high prices that's exactly what the administration has said at the detriment to the younger generations who are trying to get their life started right we're seeing people delay family formation you're seeing the first first time home buyer you know come from 28 years old all the way to 40 years old according to NAR studies so you're starting to see things really change in terms of how people view housing as an investment how they are starting their life off and they're delaying major life events because of this affordability crisis no that's that's that's great information I I remember seeing the timeline of what a normal an average foreclosure took across the country and how it basically doubled from like 2019 to 2022 and seems like that's coming down a little bit I think people are trying to figure out when cause banks are starting to realize how many are hitting the books so um now this is great information now now for for buyers home buyers investors you know still looking for an opportunity what indicator should they monitor um you know local headlines should they keep an eye on potentially find some real market opportunities yeah I think right now you know inventory in days on market is the number are like the most important ones right if somebody hasn't sold their house is still in the market multiple times generally there's a reason for it and there you can get significant discounts on that but where we're starting to see distress and people pick up assets for really low prices is condos condos are doing horrifically that we're already seeing you know an extreme buyers market because they're underfunded generally these associations are managed by other people who live in the community have no business running these associations and they run it into the ground they don't collect enough money from everybody to do the repairs they're not doing the diligence on it the property management companies aren't very good uh so you know then they have to do an assessment on the community they don't have the money because you know they just don't have the money yeah for these condos and then there's all this deferred maintenance that shows up all this distress and so you can buy condos and townhouses for pretty good uh prices if you can see the amount of distress but you do have to deal with that risk of that community having issues they could restrict short you know short term rentals long term rentals rental caps all these other things so you need to be pretty sophisticated to be able to do that in this market but there's always distress in any market even in hot markets you can find deals I still have people who are finding deals for 60 cents on the dollar they have to obviously do some renovations to them but there there's always deals out there regardless of the market but there will be more deals in the future from this distress John I really appreciate your time um that's about all all we have for today um cool for for the audience that wants to find you we'll definitely leave a link below but anything you want to mention to them where they can find you how they can learn more about your your your articles and your videos yeah so um I'm on YouTube at John Brooks I'm also on uh X at John Brooks so you can find me there so just type it in and you can see what I have to say about the market I'm reporting from a ground level view I have the institutional knowledge cause that's where I came from but and you know for the last decade I've been spending time on the front lines talking with buyers and sellers so I think my perspective is a little bit more unique then a lot of these people who have never actually sold a home never talk to a buyer and seller never talk to a top agent who sat at an open house for four hours with no showings on during busy season that's like a perfectly priced house right they don't have they don't have that knowledge or those conversations that's why I think my perspective is a little bit different especially different from the mainstream media uh because they are paid media to promote a housing shortage narrative that is not true in the majority of the United States and that's because they want to create that FOMO that you were talking about hey you gotta get in quick these houses are selling like they're out of style and it's just if if you see that and I saw one yesterday from Newsweek it's just they're still pitching the the narrative that there's a shortage they don't understand the nuance of what's actually happening in the market we are undersupplied affordable housing and we're over supplied houses from the 500 to 800 thousand dollar price point because nobody can afford them at today's rates and that's a completely different narrative than a shortage we have the physical structures to sell they're just at the wrong price point so good job there and I'm I'm definitely gonna be following you and we'll make sure to add some links below to all of your information for people who wanna continue to to follow along your journey to explore pre foreclosures and other distressed property opportunities in your market please visit foreclosure.com don't forget to sign up for our free foreclosure alerts until next time I'm Tim Jones and thank you for watching
00:00:00.033 --> 00:23:21.333
there's been a lot of discussion about pre foreclosures lately yeah pre foreclosures are rising across the country we're in a consumer credit crisis right now Florida is the epicenter Texas obviously is an issue we're seeing it rise in call call Colorado Arizona Washington State what we've seen is basically a backlog of all of this distress for the last five years and now it's starting to come to fruition as we see prices come down you're going to see more distress show up on the preforeclosure side welcome back everyone I'm Tim Jones with foreclosure.com I'm excited to introduce introduce our guest today John Brooks John thank you for taking the time to speak with us today yeah excited to be here well John has his boots on the ground up in Northeast Florida and is here to break down where pre foreclosures are rising what's driving them and what to watch for next um John before we we jump in can you give everyone a brief background of your real estate experience yeah sure and I'll just give you a brief overview you know I started off as a quant in a economics and statistics group so I'm very big into data and analytics and understanding the reports really matter and the footnotes always matter and the assumptions always matter which has got me looking at the real estate market from a different perspective then I became a real estate investment banker at a Wall Street bank and I did the underwriting for billions of dollars worth of single family rental loans for the aggregators right American Homes 4 rent progress etcetera uh and then I became a real estate agent uh and switch gears and I started to you know get out of the ivory tower view and and actually came in and saw what was happening on the ground around I became the No. 1 real estate agent in my market Jacksonville Florida built a team uh sold a ton of real estate Learned what buyers and sellers are going through throughout the transaction and their lifestyles what the issues are to them then I opened my own brokerage in 2020 it took off we we've got over 300 agents and now I talk to agents across Florida and in Georgia title company mortgage stuff all of it in between we see it we analyze it and now I have a housing website move with momentum.com that you know focuses on real estate data and what is actually happening in the market because the headlines are saying one thing and what's happening on the ground is almost the exact opposite wow hahaha well thank you for that high level overview I mean that's quite impressive what you've accomplished in a relatively short period of time so um and I'm excited to talk to you cause I feel like with your experience on both looking at the analytics analytics the data as well as you know actually doing this in practice and helping with your brokerage and all of your agents so um let's dive in OK um there's been a lot of discussion about pre foreclosures lately can you explain briefly what a pre foreclosure is and why more people are hearing about them today yeah pre foreclosures are rising across the country for various reasons but simplify a pre foreclosure is basically when a bank when when a borrower is delinquent on a loan and the bank has issued what we call lis pendens which is basically a notice of the foreclosure lawsuit to reclaim the property now usually they're delinquent you can only issue a pre foreclosure after their hundred and twenty days but it I think it depends on the state as well so there's certain rules you have to focus on but after hundred twenty days the bank will decide okay they're delinquent do I go through the foreclosure process do I sell the loan to somebody else do I approve a short sale do I work with the borrower to do a loan modification um but these this stress underneath the surface is rising off of record low levels because of what we had previously were workout programs that were designed during the covid time frame because of so much job loss to keep people in their homes but they kept these programs going and still have them going they made them a little bit more challenging as of October 2025 so the reason why we've seen record low default rates and um everything is because of the workout programs from the distress basically borrowers can miss their payment and lump it on the back of of their mortgage and basically do a mini loan modification this creates a lot of title issues when they go to sell because they have to make sure that they can actually find everything but we see this on a day to day basis and so what we've seen is basically a backlog of all of this distress for the last five years and now it's starting to come to fruition because it wasn't being pursued previously due to these you know extended covid situations that were meant for crisis periods but lasted way long beyond that yeah no that brings and and and it's interesting because from a national perspective it it you're you're seeing you know both ends um are do you think pre foreclosures are increasing nationwide or is it more in certain areas states metro areas what are you seeing yeah so I mean Florida is the epicenter Texas obviously is an issue we're seeing it rise in Colorado Arizona Washington State so it's no longer just the Sun Belt it is spreading in areas that had rapid growth of price appreciation and now that we're seeing a little bit different of a correction start to come into play a little bit more shakiness on the job market we're starting to see people actually experience the distress specifically the people who purchased their home in new construction communities and didn't understand that their taxes were going to go up so much their payment was gonna go up the insurance was gonna go up and they're locked into these houses with these low interest rates life event happens they can't move out they're stuck because now they're competing against the builder who's offering 50 thousand dollar credit and 20 thousand dollar upgrade a new golf cart like they're begging basically you know people to buy these houses so they're stuck and they're turning into short sales they're turning into pre foreclosures and that's part of the reason why we're seeing it in Florida is there's just so much new construction that you're competing with and now prices are coming down yeah well so from a local economic factors are are are driving higher preforeclosures in some markets remain relatively stable or some markets are doing just fine it it depends on where the correction is and a lot of this is based on jobs as well cause you know you know selling if you can sell your house and you have equity in your house then it's not a problem right so the people who are fine are the those who purchased before 2020 even 2021 those people are usually okay the riskiest cohort of people that we're seeing are the folks who purchased in the Sun Belt markets in the oversupplied builder areas or competing with builder areas at record prices and now prices have come down 7 10 12% they don't have equity they're paying FHA and VA loans which have very low down payments so they're immediately underwater on these houses after immediately when they close and then the prices have come down so they don't have a way to wiggle out of this if they can't afford their payments they can't just walk away and sell it so that's where these pre foreclosures start to pop up so consumer debt credit card delinquency FHA loan stress all those things I've seen you mention in in previous videos those are the financial pressures influencing today's foreclosure trends you think I think they're leading indicators right when somebody stops paying their credit card they stop paying their car loan they stop paying their student loan a lot of people they keep making their mortgage payments it's on autopay all that kind of stuff right they don't have to think about it but you know we're in a consumer credit crisis right now we're not necessarily in a real estate crisis the consumers generally completely maxed out you know 78% of Americans are living paycheck to paycheck they're they're one job loss away from financial strain and if they own a house with a payment that keeps going up every single year right cause everybody thinks their payment is fixed it's not fixed uh that you know they're they're more their interest in principal payments fixed but not the taxes insurance then they have to consider the HOA fees if they have if condos are a huge issue right now um and then the maintenance and repair costs are significant to keep to upkeep the house so people are not um feeling really good consumer sentiments at a all time record low which is in contrast with the stock market so I like to say you know we have a K shaped economy the top 10% who own assets are crushing it and the bottom 80% are really struggling in this market environment and it will start to show up in the housing market as time goes on now you have to understand this isn't something that's going to happen overnight there's no this is going to take years and years to play out Florida is a judicial state these foreclosures have to go through the court system the banks are not prepared they are not staffed up to work these short sales and foreclosures but they're starting to ramp up because they're seeing the acceleration yeah no I I definitely know what you mean by just the the crazy demand that happened during Covid I mean down here in Southeast Florida it was it was nuts I I call it FOMO buying because you yeah people weren't even really trying they they just wanted to put an offer in and time people were putting offer in you couldn't do it fast enough it seemed like you know I was showing going to houses and all of a sudden 60 people are showing up to a one place you're like waiting this is a little this is a little overheated right now and and I know a lot of those people weren't anticipating that increase in taxes and definitely the insurance after the last couple storms over the few years how that's increased and yeah I know I know a lot of people are are kind of second guessing whether the home purchase was the best I best uh best choice at that time so I I know you mentioned Florida and Texas but which housing markets are are you watching most I guess closely over the next six to 12 months again I I know it's gonna take a couple years potentially to play out but what uh what markets are you keeping an eye on you think could be even worse you know I'm looking at the northeast because one of the most important things that's happening is the change in my migration patterns we're already seeing a lot of people from the northeast they used to come to the Sunbelt areas right like migration to Florida was tremendous we had over 300,000 net migrants uh to to Florida now we're down to 22,000 and instead of them coming to Florida because now Florida is really unaffordable to the regular American they're going to the Midwest so we're seeing flows change I'm also concerned about the northeast because they have an aging population they have aging inventory they haven't built and so prices have kept up and so you know a lot of people are looking for affordability they're they're deciding where they're going to move their family and start their life based on where the wages make sense against the shelter cost cause the shelter cost is one of their largest expenses and they're going out to the Midwest and they're not coming to the Sun Belt as much anymore and so we're gonna have we're gonna have to see a correction right because we have 22% of our population here over 62 years old and so and you know sadly people are gonna pass away this is the demographics is destiny conversation and there who is going to replace these people in 20 30 years because birth rates are declining so unless we have some sort of mass immigration to fill the spots and fill these houses and we've already got a ton of vacant houses who is going to be the next buyer at today's prices when it's already so unaffordable to the locals the only people left remaining buying right now in in the majority is like dual income high earning families who are locals that can make their you know scrub their nickels together and buy a house cause we see it every day or it's very wealthy people from the northeast or out west who've already made their money and they're relocating to Florida for tax advantages for homestead advantages um and they wanna they wanna live the Florida lifestyle they already have their money it doesn't matter to them and that's where we talk again about the K shaped economy the locals are priced out so where this is changing migration patterns and the other issue is that it's so unaffordable that people are doubling up on houses and they're they're basically buying them together they're moving back in with their parents they're you know doubling up we weren't seeing this kind of trend you know before the prices just got so unaffordable so I think this is gonna change the dynamic between buyers and sellers moving forward and as we see prices come down you're going to see more distress show up on the pre foreclosure side because of the demand change and if we see interest rates move up further from here it's going to be devastating for the demand side and so we've already seen transactions crash they are down 35% I know a lot of people say okay well you know prices haven't come down no they haven't prices are sticky real estate is an illiquid asset class it takes time for this to play out but the first step is transaction stall we're seeing pendings down another 25% year over year and at a certain point the inventory will stack up and we will continue we will see the distress filter through if there's some sort of job loss uh type of event that happens or some sort of credit market event which already is starting to happen right Besant stepped in with $4 billion you know to to try to help the the housing market by buying these 30 year Treasury bonds to keep rates lower the market didn't like that that's already popped back up so the government will do whatever they can to delay the distress as long as humanly possible but the markets eventually gonna catch up with them no that's a great points I feel like the inventory is something you really gotta keep your eyes on because you know some of those pandemic markets in the beginning like Austin and Southeast Florida Miami that had their inventory dropped you know 60 70% now they're going through the roof but it's interesting how the northeast they're still kind of tighten inventory I was just in New Jersey not too long ago and they're still seeing some appreciation in that area because the inventory is so low and they didn't build yeah they didn't build the scarcity aspect of it I feel like that has something to do with it um where down here every they're building everywhere you know almost probably overbuilding maybe some will say definitely overbuilding it's it's completely overbuilt and they're overbuilding multifamily and I can prove it because we're seeing rental rates come down pretty significantly 10 to 20% wow in these areas that are overbuilt and that changes the calculus for the investors where now they have to offer less as a backstop because they can't get the rental rates that they were getting previously that's a that's a good point so diving back into preforeclosures and foreclosures so many people assume every preforeclosure becomes a foreclosure can you explain what typically happens after a property enters preforeclosure and why buyers should understand the different outcomes yeah so the seller gets notified that the house is now basically in litigation with the bank and the banks starting the process to take the house back through the courts and ultimately it there's like so many different things that can happen we've actually bought from foreclosure auction so we can see that even up until the day of the foreclosure auction it doesn't go to foreclosure auction for whatever reason they find a solution they do a payoff they declare bankruptcy they delay delay delay they file a countersuit for whatever reason the banks doesn't care honestly they just wanna get their money back as fast as possible and minimize the amount of losses a lot of these governments uh loans too if they're you know Freddie Fannie if they're FHA VA they're backed by the US taxpayer there's funds that's why you pay some of these premiums at the closing table to fill these things so ultimately like when the when we give out all these bad loans if it if it overflows the taxpayer ends up paying for for for the situation but for for buyers looking at pre foreclosures it's just an indicator that the seller is in distress um or they're they're just in distress not even that they're selling it just takes so long for the courts to process this through that doesn't necessarily mean that you're going to get a discount now some of these will turn into short sales but you have to uh the short sale process is pretty interesting you have to document your distress for several months you have to be talking to your bank you have to get approval and short sales you know can go anywhere from six months to two years to get approved that that just uh you know it doesn't even include getting the price approved so the bank is going to go do what's called a BPO a broker's price opinion on the house and determine the market value of it and when they receive offers on a quarterly basis there's asset managers that sit and review those offers and see what they're going to approve so you know it doesn't even mean that you're going to get the price that you offer a lot of the times you don't the market hasn't fallen that much yet so the banks really don't have the motivation to accept a short sale yeah so so you know I think when you're thinking about it from a buyer you think oh they're in distress I'm gonna get this wicked deal that's just not the case at least not right now not until there's really widespread short sales and foreclosures where the banks just want the liquidity I don't see that happening um anytime soon definitely not in the next year or so but I I can definitely see the number of short sales and pre foreclosures rising that's interesting yeah no that brings up a great point because I know back in like the last um housing recession um there the property appreciation fell so quickly that the most of the properties were underwater where after Covid there was a big increase in appreciation so even if they're coming down so that really kind of puts the pressure on the people that bought recently it seems like people who bought in the last couple years who again I think FOMO bought into you know thinking they're never gonna be able to buy a house again if they don't buy it this day well we were pitched that there was a by the media the mainstream media that there is a housing shortage which just was never the case I know this because I was selling in 2019 and we did not have a shortage of housing in 2019 what happened was we had a demand shock because of Covid where we had all these people relocate at the same time yeah a a a 10 year fast forward of demand into three years is not a shortage it's just a demand shock now those pull forward buyers are not there and there's a gap meanwhile the builders built thinking that the migration patterns would continue at that high rate which is why we're now seeing the over supply in certain markets again it's not everywhere in Florida it's pockets but once a pocket hits it really distresses the areas around that pocket in a lot of ways um and to reference you know the time frame that this happens right 2006 is when we started to see prices decline and we didn't really hit bottom until 2,012 that's a six year period this and that was with forced selling from the banks through the government right so this is something like this could be a decade long type of correction uh period and you know Lehman didn't happen until 2008 right so these type of things you can see them coming far in advance that's why it's really hard to time when things will really accelerate I'm not gonna even stick my hat in the ring on that because you I'm just gonna be whatever I say is going to be wrong yeah because you don't know how much government intervention is gonna be you don't know where interest rates are going to be and the government will step in the government wants to maintain their high prices that's exactly what the administration has said at the detriment to the younger generations who are trying to get their life started right we're seeing people delay family formation you're seeing the first first time home buyer you know come from 28 years old all the way to 40 years old according to NAR studies so you're starting to see things really change in terms of how people view housing as an investment how they are starting their life off and they're delaying major life events because of this affordability crisis no that's that's that's great information I I remember seeing the timeline of what a normal an average foreclosure took across the country and how it basically doubled from like 2019 to 2022 and seems like that's coming down a little bit I think people are trying to figure out when cause banks are starting to realize how many are hitting the books so um now this is great information now now for for buyers home buyers investors you know still looking for an opportunity what indicator should they monitor um you know local headlines should they keep an eye on potentially find some real market opportunities yeah I think right now you know inventory in days on market is the number are like the most important ones right if somebody hasn't sold their house is still in the market multiple times generally there's a reason for it and there you can get significant discounts on that but where we're starting to see distress and people pick up assets for really low prices is condos condos are doing horrifically that we're already seeing you know an extreme buyers market because they're underfunded generally these associations are managed by other people who live in the community have no business running these associations and they run it into the ground they don't collect enough money from everybody to do the repairs they're not doing the diligence on it the property management companies aren't very good uh so you know then they have to do an assessment on the community they don't have the money because you know they just don't have the money yeah for these condos and then there's all this deferred maintenance that shows up all this distress and so you can buy condos and townhouses for pretty good uh prices if you can see the amount of distress but you do have to deal with that risk of that community having issues they could restrict short you know short term rentals long term rentals rental caps all these other things so you need to be pretty sophisticated to be able to do that in this market but there's always distress in any market even in hot markets you can find deals I still have people who are finding deals for 60 cents on the dollar they have to obviously do some renovations to them but there there's always deals out there regardless of the market but there will be more deals in the future from this distress John I really appreciate your time um that's about all all we have for today um cool for for the audience that wants to find you we'll definitely leave a link below but anything you want to mention to them where they can find you how they can learn more about your your your articles and your videos yeah so um I'm on YouTube at John Brooks I'm also on uh X at John Brooks so you can find me there so just type it in and you can see what I have to say about the market I'm reporting from a ground level view I have the institutional knowledge cause that's where I came from but and you know for the last decade I've been spending time on the front lines talking with buyers and sellers so I think my perspective is a little bit more unique then a lot of these people who have never actually sold a home never talk to a buyer and seller never talk to a top agent who sat at an open house for four hours with no showings on during busy season that's like a perfectly priced house right they don't have they don't have that knowledge or those conversations that's why I think my perspective is a little bit different especially different from the mainstream media uh because they are paid media to promote a housing shortage narrative that is not true in the majority of the United States and that's because they want to create that FOMO that you were talking about hey you gotta get in quick these houses are selling like they're out of style and it's just if if you see that and I saw one yesterday from Newsweek it's just they're still pitching the the narrative that there's a shortage they don't understand the nuance of what's actually happening in the market we are undersupplied affordable housing and we're over supplied houses from the 500 to 800 thousand dollar price point because nobody can afford them at today's rates and that's a completely different narrative than a shortage we have the physical structures to sell they're just at the wrong price point so good job there and I'm I'm definitely gonna be following you and we'll make sure to add some links below to all of your information for people who wanna continue to to follow along your journey to explore pre foreclosures and other distressed property opportunities in your market please visit foreclosure.com don't forget to sign up for our free foreclosure alerts until next time I'm Tim Jones and thank you for watching
