These six factors will spell disaster for the housing market in 2021. Let's check it out. I scratch my head thinking everything is great, but there are six things that have me very concerned. Real estate is cyclical with downturns occurring every 10 years. If you think incredibly low inventory and high demand will prevent a foreclosure crisis, you have another thing coming. There are so many factors at play in triggering a tsunami of foreclosures. And if that occurs, what needs to happen? What do you need to know to avoid a personal foreclosure crisis? I've seen three major real estate downturns happen over the course of my real estate career. And there just might be a perfect storm brewing in 2021. And here's why number one, most folks do not have money in the bank. According to CNBC, 63% of Americans say they have been living paycheck to paycheck since the pandemic began in early 20, 20, 53% of those were not living paycheck to paycheck prior to the pandemic.
And even with stimulus payments, enhance unemployment benefits and small business loans. 47% of those surveys said their emergency savings have run completely out. If faced with a $500 emergency eight out of 10, people would be unable to cover the cost. Number two mortgage forbearance programs are ending soon. Now millions of homeowners have applied for forbearance. These programs are set to expire this year, and many may face foreclosure as ongoing lockdowns become a prescription for dealing with pandemics. This creates a loss of jobs, business, and other financial issues. Number three, termination of COVID-19 financial relief programs means less money for consumers. Now a substantial part of the population is facing a significant drop in their take-home pay due to a number of COVID 19 programs terminating this year, here are the four most important ones that are planning to come to an end soon, you have extended unemployment benefits, payroll tax deferral for federal employees, including military and government jobs for programs for student loans and money to help gig workers, including real estate professionals.
Number four, the group nobody's talking about is real estate investors. Now millions of Americans own a home and rental properties, but there are eviction moratoriums going on at different levels in many different areas. Now, as that happens, you have many people who have mortgages on homes that have tenants in them that have been living for months without paying their bills. Now under normal circumstances, they could easily sell the property, but how sellable is a property when you're paying a mortgage on a tenant who isn't paying the rent and can't be evicted, number five, you have home prices in certain areas are already falling. The COVID pandemic has resulted in an Exodus from many downtown metropolitan areas all over the country that are deemed high-risk number six, raise taxes, and massive spending increases ahead. According to Statista, us ended 2019 with a national debt, 23.2 trillion.
At the end of 2020, that debt had ballooned by nearly $5 trillion to 27.75 trillion. Now the Biden administration, his money man is already planning at one point trillion dollar spending package. It's just going to create future taxes for all of us to tackle these creative policies, to try and deal with the pandemic. So having said, all this there's a cumulative effect. The ideal of this is twofold. You're going to have a high national debt, which drives up the cost of everything through inflation. The same is also true of tax increases. You're going to have consumers having less buying power. Now you couple that with continued lockdowns your financial strain, you're going to have individuals with just less money to spend. And these factors could hit both homeowners as well as struggling businesses, really hard pushing many into a situation where they can no longer make it.
So what needs to take place. So if you're a homeowner in a distress situation, how can you respond? Well, here's what most likely will happen that we can see from previous downturns. Number one, they'll try and sell their property with, or without an agent. Number two, they'll stay in the property as long as possible during foreclosure to pick up free rent. This approach ruins their credit basically creates massive costs against any potential equity they have in the home, which ends up costing them a lot more, in the long run, to stay in the house. Number three, attempt to use a short sale, short sales when your property's mortgage exceeds the value. So what Oh is so much versus what the market would be interested in paying. You'd have, have to bring a check into the closing order to sell it in the absence of obviously being able to bring that check the closing, you get the mortgage lenders to agree, to accept less on the note.
If you're in a forbearance plan and it's about to expire you're in financial trouble, call your lender about extensions. I believe Fannie Mae has already advised an extension of another six months after they already granted six months bringing the total of deferring payment eligibility to a total of 360 days. So if you received a forbearance, you might have an extensive process that's available to you. But the first thing that I would say is to make sure if you haven't make sure and contact your lender about entering a forbearance program due to COVID-19 we're number two, if you have an interest rate above 4% or more consider refinancing or asking your lender for a loan modification at a lower interest rate, number three, free up part of your equity by working with an equity sharing program for programs worth, considering our home tap.com NOAA.co point.com and unisom.com.
Number four, rent your present home out and move to a less expensive rental property until your financial situation improves. Number five, if they owe more than the property's value, hire a loss mitigation firm to negotiate a short sale. Number six for additional ideas, review the list of HUD-sponsored programs to help distressed homeowners avoid foreclosure. I've attached the link to that in the description of this video. Number seven, consider talking to an attorney about restructuring your debt in your best interest. This may be an option for you. And if you're a small investor, who's in trouble, there are two potential workarounds available for you in the case where you own one to four units and you own or occupy one unit, you should check with your lender for forbearance, just like a normal homeowner. When it comes to financing, one to four-unit properties is normally treated the same as for single-family.
Res second, depending on if rent control provisions are in place and what those laws allow a buyer who intends to owner-occupied a single-family residence of a one-unit into a two to the four-unit property may be able to legally evict the current tenant there. Once they close, that may clear up the obstacle of you being able to sell the property. If you're a small investor. So hope that helps you. I know that a lot of places, the market's doing incredibly well. So it might be a determination where you just feel like you do need to sell and rent something for awhile. If that is the case, please give us a call. We also can help you mitigate short-sale situations, things of that nature. Please reach out to us. We want to be a resource to you. Thanks for watching. Hey, you can help our channel by giving this video a like subscribe to us and as always, please share this video with someone who's in need. Thanks for watching. Have a great day
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