Key Takeaways
- Foreclosure filings have surged 45% year-over-year, putting overleveraged homeowners at risk while creating opportunities for cash-ready investors.
- Government intervention is preventing 1 million defaulted mortgages from hitting the market, delaying an inevitable correction and distorting property values.
- Trump’s 2025 tariff agenda is driving up construction costs, further squeezing housing affordability and deepening the financial crisis for struggling homeowners.
Foreclosures Skyrocket While Government Intervention Raises Investor Fears
Is a United States foreclosure crisis imminent?
The U.S. real estate market is staring down the barrel of an investor’s worst nightmare—a foreclosure tsunami that could send property values crashing while government intervention distorts the free market.
With foreclosure filings up 45% year-over-year and mortgage delinquencies surging by 30% in key markets, the housing sector is on the verge of a seismic shift.
The Alarming Numbers That Keep Investors Awake at Night
A deep dive into the FHA Single Family Loan Performance Trends – November 2024 report reveals a troubling trend:
- Serious mortgage delinquencies (90+ days) rose from 4.23% in October to 4.41% in November.
- 30-day delinquency rates climbed from 6.18% to 6.62% over the same period.
- Over 1 million FHA mortgages—nearly 14% of the program’s portfolio—are currently in default.
- The government is preventing 400,000 seriously delinquent loans from entering foreclosure, delaying the inevitable collapse.
Key markets seeing the biggest spikes in mortgage distress:
- Las Vegas, NV – Delinquencies up 35%, foreclosures up 49%.
- Phoenix, AZ – Delinquencies up 32%, foreclosures up 52%.
- Orlando, FL – Delinquencies up 30%, foreclosures up 47%.
How Government Policies Are Distorting the Market
The Wall Street Journal exposed how the Biden administration has kept the mortgage relief spigot running well beyond the pandemic.
Instead of allowing market corrections to take place, the government has:
- Blocked over 1 million defaulted mortgages from foreclosure.
- Paid borrower incentives and slashed mortgage payments by 25%.
- Deferred unpaid balances, piling on even more debt for struggling homeowners.
If these policies were suddenly removed, experts estimate the U.S. housing inventory would increase by 40% overnight, triggering a wave of price collapses in FHA-heavy markets like Fort Worth, Las Vegas, and Orlando.
Could Trump’s 2025 Tariff Agenda Worsen the Foreclosure Crisis?
In 2025, President Donald Trump introduced significant tariffs on imports from Canada, Mexico, and China, aiming to address national security concerns and protect domestic industries.
These measures include a 25% tariff on steel and aluminum products and a 10% tariff on energy resources from Canada.
Impact on Construction Costs and Housing Affordability
The construction industry heavily relies on imported materials such as steel, aluminum, lumber, and gypsum, primarily sourced from Canada, Mexico, and China.
The imposed tariffs have led to increased costs for these essential materials, with estimates suggesting that building a single-family home could become $7,500 to $10,000 more expensive.
This surge in construction expenses is expected to exacerbate the existing housing affordability crisis, making it more challenging for potential homeowners to enter the market.
Potential Consequences for the Foreclosure Crisis
The heightened costs associated with home construction may lead to a slowdown in new housing developments, further tightening the housing supply.
This scarcity can drive up home prices, potentially pushing current homeowners into financial distress, especially those already struggling with high mortgage rates.
Consequently, the foreclosure rate, which has already seen a significant increase, could escalate further, deepening the existing crisis.
Investor Considerations
Real estate investors should be acutely aware of these developments.
Rising construction costs can deter new projects, limiting investment opportunities and potentially reducing returns.
Additionally, the increased likelihood of foreclosures presents both risks and opportunities; investors may find distressed properties at lower prices but must navigate a market fraught with economic uncertainties.
What This Means for Real Estate Investors
For real estate investors, this moment presents both massive risks and rare opportunities.
The Risks:
- Property values could tank in FHA-heavy neighborhoods if the foreclosure backlog is unleashed.
- Buy-and-hold investors may suffer losses as more homes hit the market, driving down rental prices.
- Fix-and-flippers could get trapped if home prices continue to slide.
The Opportunities:
- Deep discounts on distressed properties for investors with cash reserves.
- Creative financing strategies (subject-to deals, seller carrybacks) will become more crucial than ever.
- Increased rental demand from former homeowners who lose their properties.
Will 2025 See a Full-Blown Housing Crash?
Experts warn that foreclosures could surge another 20% by mid-2025 if interest rates remain at their current 8.9% levels.
The real question is whether the government will step in again to prevent market corrections, further distorting the supply-demand balance.
Government hiding foreclosures. Over 1,000,000 loans in default.
The US government is currently stopping over 1,000,000 defaulted mortgages from going to foreclosure under the FHA mortgage program. The result is another Subprime Housing Bubble, one that could cause huge declines in home prices around the US if it’s allowed to burst.
The WSJ just broke a story uncovering how the Biden administration continued to offer mortgage relief to defaulted homeowners well after the pandemic was over. Right now there are over 300,000 seriously delinquent mortgages being blocked from foreclosure by these regulations in 2025.
Source: Reventure Consulting via YouTube
Reventure Consulting teaches home buyers and real estate investors how to use data to make smarter investment decisions. By combining data from a variety of sources – including the US Census, BLS, Zillow, and Apartments.com – Reventure has developed a suite of analytics to home buyers and real estate investors make more educated decisions about where and when to buy real estate.
DISCLAIMER: The information provided by Reventure Consulting, LLC and Nicholas Gerli is for general informational, educational, and entertainment purposes only. All information on the Reventure Consulting YouTube Channel is provided in good faith, however, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of said information.
Neither Reventure Consulting, LLC nor Nicholas Gerli is a registered financial advisor.
Assessment: Housing Market on the Brink of Massive Collapse. Are you ready?
The government’s artificial support of delinquent homeowners and Trump’s new tariff policies are creating massive uncertainty for investors.
Rising construction costs, limited new development, and a foreclosure backlog poised to flood the market spell volatility in the months ahead.
For investors, those with cash and creative financing strategies will thrive, while flippers and traditional buyers reliant on loans may struggle.
The biggest takeaway?
Expect turbulence and be ready to act fast when opportunities arise.
