With the recent strong economy and prior to the COVID-19 pandemic, home loan delinquency and foreclosure rates had fallen to the lowest in a generation. The nation's overall delinquency rate was the lowest for a January in at least 20 years. The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 1.7% in January 2020, down from 1.9% in January 2019. The share of mortgages 60 to 89 days past due in January 2020 was 0.6%, down from 0.7% in January 2019. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.2% in January 2020, down from 1.4% in January 2019. This is the lowest serious delinquency rate experienced since April 2000, when it was 1%.

It is expected that pandemic related job losses will fuel delinquencies. However, it is hoped that wide-spread foreclosures will be averted because of the home equity buffer that homeowners have along with the available forbearance programs. CoreLogic’s Home Equity Report found that at the beginning of 2020, homeowners with a mortgage also had an average of $177,000 in home equity.

“It is likely that areas of the country that have local economies driven by energy, transportation and media and entertainment will lead the way in delinquencies. The ultimate extent of the higher delinquencies will depend on how quickly the broader economy opens up again and employment levels rebound – both of these factors are uncertain at this time.” [Frank Martell; President and CEO of CoreLogic]

National home prices increased 4.1% year over year in February. Connecticut was the only state to post an annual decline in home prices.National home prices increased 4.1% year over year in February 2020, according to the latest CoreLogic Home Price Index (HPI®) Report. The February 2020 HPI gain was up from the February 2019 gain of 4.0%, showing that prior to the COVID-19 outbreak home prices were starting to heat up.

The HPI has increased on a year-over-year basis every month since February 2012. The HPI has gained 63.6% since hitting bottom in March 2011. As of February 2020, the overall HPI was 10.1% higher than its pre-crisis peak in April 2006, just before the start of the 2007 financial crisis. Adjusted for inflation, U.S. home prices increased 2.2% year over year in February 2020 and were 11.2% below their 2006 peak. [Source: CoreLogic]

The commercial real estate market has seen value growth within the past few years.  Economic development has surged since 2016.  Most vacant industrial space has been absorbed, however, office and retail-type buildings continue to have higher vacancy rates.  The specialty retail segment has seen the most growth especially in the form of neighborhood mini-shopping center/strip-mall-type buildings and those centered around freeway exits with fast food, hotels and highway service facilities.  Big box store expansion along with traditional brick and mortar retail are in a mode of rediscovery due to the impact of internet sales. The health of the commercial real estate market, like the residential market, will also depend on how quickly the broader economy and employment levels come back from the Coronavirus pandemic.