Living in the San Juan IslandsOrcas Island Real Estate MarketReal Estate December 8, 2021



Naturally, there are lots of questions regarding the real estate market as the sun sets on 2021 and we chart our course for 2022.  At year’s end, we’re still seeing home prices and equity gains at record levels, inventory as tight as a post-holiday Hanukkah Harry or Santa Suit, mortgage rates creeping upward, and the close of the Mortgage Forbearance Program.  These market factors have led some to believe a wave of foreclosure is on the horizon, leaving some sellers nervous at the dock and some buyers on anchor waiting for a foreclosure frenzy reminiscent of the one experienced in 2008.

Yes, foreclosures are up over 2020. Nationally, U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions is up 76% from a year ago1.  But, it’s important to note, in 2020, there were virtually no foreclosures due to COVID-relief programs assisting struggling Americans to pause mortgage, utility and other home-related payment commitments. According to ATTOM, comparing September 2021 to September 2019, foreclosures were down 70%.2

“As expected, now that the moratorium has been over for three months, foreclosure activity continues to increase. But it’s increasing at a slower rate, and it appears that most of the activity is primarily on vacant and abandoned properties, or loans in foreclosure prior to the pandemic.” – Rick Sharga, Executive Vice President, RealtyTrac / ATTOM.



Homeowners still struggling at the end of governmental and mortgage industry assistance programs find themselves sailing a far different real estate market than owners in the foreclosure-driven market of 2008. Current market highs, brought on in part by a Pre-Pandemic shortage of housing starts and low inventory; fallout from the Subprime Mortgage Crisis are the driving forces behind today’s home value growth and demand.  Today’s home values can be attributed to actual household-formation demand versus the house-of-cards home values created by underwriting mortgages to large numbers of high-risk borrowers.

Additionally, after the housing crash, new regulations and safeguards were put in place to, as Michele Lerner of the Washington Post says, “ensure that the trauma of the housing boom-and-bust and the Great Recession are not repeated,” a brutal lesson remembered when we were faced with COVID-19.

It’s the health of our housing market and the regulatory lessons that present homeowners, the options in lieu of foreclosure to:

    1. LOAN MODIFICATION – As long as borrowers have income, they may qualify for a loan modification to lower monthly payments.
    2. SELL – With home prices at record highs, most borrowers have positive equity and, with this, a mortgage balance lower than their market value. In our high-demand market, many borrowers who sell may be able to both sell their home quickly and possibly walk with seller proceeds (cash).When pandemic-inspired home buying knocked, homeowners saw home values skyrocket.  Just months after the first COVID-19 lockdowns, owners saw home values rise at the fastest rate in history. By September 2021, the peak of median home values, Zillow® reports San Juan County homeowners’ values jumped 17.38% over their Pre-Pandemic January 2020 values. And for Orcas Island, Zillow® shows the Eastsound Area saw an 18.42% increase and the Olga Area an 11.88% increase for the same period.
    3. HOMEOWNER ASSISTANCE FUND – Nearly $10B, the program created by the American Rescue Plan works to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services and displacement of homeowners experiencing financial hardship after January 21, 2020.



Chances are high you’ve crossed paths with an article, post, or a friend discussing what the end of forbearance and rising interest rates may mean for the 2022 real estate market. Looking at the two market forces of supply and demand, the supply of new housing starts and existing homes will continue to limit the number of homes available to meet the continued high homeownership demand, sustaining the growth of home values into the foreseeable future.

The lack of inventory and demand level cannot support the necessary volume of foreclosures required to devalue most Americans’ largest asset, our homes, as seen in the Sub-Prime Lending Crisis.  This is why we feel there is not a tsunami of foreclosures off our bow, and why if you’re considering buying or selling – while more inventory is coming online and mortgage rates, still near historic lows, it’s a great time.

If you’d like more information about current market conditions, where to locate mortgage assistance, your home’s value, or review, help to find your island dream home – Please call us; we’d love to talk real estate and assist in any way we can.

Cheers and Season’s Greetings – Wally, Laura & Terri / The Wally Gudgell Group
Wally Gudgell Group Windermere Real Estate Orcas Island Your San Juan Islands Real Estate Team