Foreclosure auctions expected to rise in 2022, consumer survey finds

Approximately four-in-10 Americans expect an increase in the number of homes available for sale via foreclosure auction next year as CARES Act-related forbearance periods end and some are unable to cure or modify their mortgage, a survey from ServiceLink found.

And willing buyers abound, as 62% of those surveyed said they would consider purchasing a home via an auction. Only 10% said they already have.

Due to the end of pandemic-related moratoriums on foreclosure actions, starts increased by 5% month-over-month in October to 10,759, according to a recent Attom Data Solutions report. Timelines vary by state, however, and in some with judicial foreclosures, it could take years before a property becomes available for sale. Completed foreclosures totaled 3,027 in October, up 13% from September.

Over 1 million mortgages, or under 2% of outstanding loans, remain in a forbearance plan as of Nov. 9, according to the latest data from Black Knight.

While 39% of all respondents expected an increase in foreclosed homes for sale in 2022, the highest shares came from consumers 65 and older, at 46%, and those between 55 and 64 at 43%, groups that have more experience living through boom-and-bust housing cycles.

The top two reasons respondents were motivated to purchase a home at auction were the potential cost savings (70%) and a faster process (57%).

Younger buyers are more willing to consider purchasing a home at auction, but that might be more of a result of frustration with what is still a relatively hot purchase housing market, albeit one that is cooling.

Three-quarters of millennials, those defined between 25 and 40, would consider buying a home at auction. This compared with 65% of Gen Xers (those between 41 and 56) and 54% of baby boomers (people between 57 and 75).

More respondents expected prices to increase next year versus those that believed they will drop, 45% to 21%. Just over one-quarter of the respondents, 26%, said they believe more Americans will choose to rent than buy in 2022.

Meanwhile 21% of millennials already bought a home at auction, versus 13% of Gen Z (aged between 18 and 24), 6% of Gen Xers and 4% of baby boomers.

"It's not surprising that millennials are pursuing new opportunities to achieve homeownership, particularly in the current real estate market where they are facing challenges due to high prices and low supply," Miriam Moore, president of default services at ServiceLink, said in a press release. "We expect that more auction properties will hit the market next year through foreclosure and buying homes at auction will become more mainstream as consumers look to buy quickly and at competitive pricing."

This online survey was conducted by The Harris Poll on behalf of ServiceLink between Oct. 25 to Oct. 27, with 3,058 adults ages 18 and older responding.