A rise in foreclosures signals growing household stress that official data still isn't capturing
The stock market is strong, unemployment remains low, and rates have steadied—but none of that matters if consumers can’t pay their bills. That’s the real story behind the recent uptick in foreclosures, according to Glen Weinberg, managing partner at Fairview Commercial Lending.
“I’m kind of feeling it in the economy. I just don’t have the data to back it up,” Weinberg said.
Foreclosure filings jumped in October, according to a new report by property data and analytics firm Attom, rising by 20% compared with the same time last year.
Over 36,000 US properties had some form of foreclosure filing last month, a potential sign of strain in the housing and mortgage markets as more homeowners struggle to meet their payment obligations.
For Weinberg, much of the data being used to paint a picture of economic stability is misleading or incomplete. “The government can’t even tell us how many people are employed or unemployed in the government sector,” he said. “There’s some huge gaps in the data that are concealing what’s going on in the economy.”
One blind spot, he pointed out, is unreported consumer debt from services like buy-now-pay-later platforms. “Someone who’s just using buy now pay later is a higher credit risk than someone who’s not using it because they’re under some financial duress and they need that liquidity,” he said.
Inflation pain is masked by macro numbers
Weinberg believes a widening gap is forming between broad economic indicators and household-level stress. “People are having problems paying for groceries,” he said. “Anybody going to the grocery store or the gas station knows inflation isn’t gone.”
The return of student loan repayments after years of pandemic-era relief has only added to the financial strain. “Nobody paid student loans in the US for basically five, six years, and now people... have to start paying back,” he said. “It’s causing more stress.”
Despite this, the Fed appears poised to move slowly. “The Fed does not control mortgage rates,” Weinberg said. “The Fed merely sets short-term rates. The market controls longer rates.”
Even when the Fed cuts rates, it may not bring the relief borrowers expect. “Mortgage rates didn’t really move much,” he said, referencing a prior cut. “There are all these other pressures—deficit spending, inflation—that keep mortgage rates elevated.”
Weinberg expects rates to remain between 6.5% and 7.25% through the end of the year, which would continue to suppress affordability. “There’s this perception the Fed is going to bail real estate out,” he said. “They can’t. Mortgage rates are going to stay high.”
Pandemic-era supports aren't driving the wave
While some analysts have pointed to the expiration of mortgage forbearance programs as a driver of foreclosures, Weinberg disagreed. “I don’t think that’s the driver of what we’re seeing now,” he said. “I think the driver is unemployment and stress in the economy and overleverage, basically.”
He acknowledged that as stimulus dollars fade—such as those that helped cover mortgage costs in cities like Denver—there would be some added pressure. But the bigger issue is a structural shift.
“I do think we’re going to see an increase in foreclosures over the next 18 months,” Weinberg said. “Not because of the pandemic era... but just because of a change in the economy.”
One scenario already playing out involves homeowners who locked in sub-3% mortgage rates during the pandemic and are now facing difficult choices. “They got a job in Toronto or wherever, and now they’re forced to sell,” he said.
That forced selling, combined with affordability challenges, will likely push the market into more turbulence. “I’m terming real estate right now ‘just stuck.’ Not much is happening. But it’s going to start becoming unstuck over the next 18 months.”
No bailout expected—and no 2008 crash either
With government intervention off the table, Weinberg believes the market will need to correct on its own. “I don’t think there’s going to be any appetite for a bailout of anybody right now,” he said. “They’re going to let this market unwind.”
But that unwinding won’t mirror the collapse of 2008. “People have more equity. There are a lot less liar loans and variable rate products,” he said. “And you’ve got billions of dollars of Wall Street money sitting on the sidelines.”
That capital could help soften any significant drop in property values. “You could still see declines in the 10-20% range,” Weinberg said, “but not 30%, 40% like in 2008.”
Still, the impact will vary by region. “You can take a market like Indianapolis, Indiana, which is still appreciating, and compare it to Denver, which has taken along at 20% price increases year over year,” he said. “It’s going to be very market specific.”
Fairview, which services its own loan book primarily across Georgia, Colorado, and Florida, hasn’t seen a spike in delinquencies yet. “Our portfolio is performing pretty much constant, like the last 12 to 18 months,” he said.
That data suggests the next 6–12 months won’t bring a crash—but it doesn’t mean stability will hold. “We’re going to have choppiness in real estate,” he said. “But we aren’t going to have an ’08 shit-hits-the-fan type of event. At least not in the near term.”
Condos under pressure, urban markets strained
Weinberg’s greatest concern lies in the condo market. “That’s my biggest area of concern,” he said, citing rising inventories, insurance issues, and large special assessments in cities like Denver. “It’s going to lead to some price declines.”
By contrast, he expects suburban single-family homes to perform better, particularly as remote work fades and companies relocate to lower-cost cities like Atlanta or Nashville. “People are going to be back in the office, and cost of living is important,” he said. “You can’t make enough money to buy a house in Denver at a 6.5% interest rate.”
He also warned of the impact of civil unrest and urban crime on real estate confidence. “It definitely doesn’t help by any stretch of the imagination,” he said, referring to reports of National Guard deployments in cities like Chicago and Portland.
“People are moving to suburban markets,” he said. “When you have an encampment... it has a huge impact on businesses and individuals living in those areas.”
Urban cores are losing their appeal, and the trend isn’t new. “The National Guard troops unto themselves aren’t going to make the market change,” Weinberg said. “But it’s going to highlight some underlying issues with crime and urban flight that have been going on for the last several years anyway.”
