The entire world is being hit by the COVID-10 pandemic, and with many out of work, the real estate industry is being hit. In a recent webinar, Five Star Global President and CEO Ed Delgado gave a “state of the industry” update on sales and home price trends, forbearances, and the REO market.

Using data from the Bureau of Labor Statistics, Delgado noted that with the record high unemployment levels, twelve years of job recovery have been wiped out.

However, going into the crisis with such a strong economy, the crisis was not as impactful as it could have been. Moving forward, Delgado states that he is leaning toward a “W-shaped” recovery, aka a “double-dip recession” with two downturns leading to final recovery.

“A bit of mixed news here in that it’s not going to be the brief blip on the screen,” said Delgado. “I don’t think we’re going to be out of this in six months, I think it will be closer to 12.”

The slow recovery extends to the mortgage and servicing market. According to Black Knight, 3.6 million homeowners were past due on their mortgage at the end of April, up by 1.6 million month-over-month.

Citing forbearance trends, approximately 4.5 million homeowners are in forbearance plans as of May 19, representing 19% of all mortgages.

While some servicers may be receiving liquidity assistance due to the loss from forbearances, nonbanks are still facing shortfalls related to these plans. Ginnie Mae has responded by approving a servicer liquidity facility, and the FHFA has approved the purchase of previously ineligible mortgages in forbearance by Fannie Mae and Freddie Mac.

The housing market is expected to be further complicated by the hurricane/wildfire season overlapping with COVID-19.  Delgado asks how the industry playbook for natural disaster response will be impacted by social distancing and the work-from-home environment.

“We haven’t felt the full force of the impact COVID-19 has had on the economy, and the recovery will be protracted,” Delgado stated.

To hear the complete webinar, click here.