James:
The housing market is sending mixed signals, and today’s headline show why the context behind the numbers matter. Foreclosures are rising, but remain well below historical norms. Buyers are gaining more choices in negotiating power and cash offers are losing some of the advantages they once had. Together, these stories point to a market that is slowly becoming more balanced, but still looking very different depending on where you are and what strategies you are pursuing. I’m James Dainard here with Kathy Fettke and Henry Washington to break down what these shifts mean for investors. This is On the Market. Let’s get into it. All right, Kathy, what do you got for us today?
Kathy:
Well, what I’ve got is what confuses people a lot. It’s a headline. And this is from Adam Data Solutions, and they just kind of gave it the facts, but then news articles all over just took it and ran with it. And that is that foreclosure starts rise 18% in the first half of 2026. So that sounds scary, right? And then it goes on to say a total of 227,000 properties with foreclosure filings. So again, very, very scary. And you might read that headline and think, oh my gosh, the housing market is crashing and all these people can’t pay their mortgage. But you got to read the article, people, just read it. So in it, when you look and see, yes, it has increased. In 2021, foreclosure activity was 65,000. So the next year went way up to 164,000. Why do you think that was, you guys?
Henry:
Yeah, because they were holding off on foreclosing.
Kathy:
Because you couldn’t foreclose, right? But the headlines were like, “Oh, it tripled.” And then the next year, 185. And then anyway, it has climbed up quite a bit. And if you were to just look at what happened over the last five years and say foreclosures have quintupled, it is scary. But what’d you think about 2018? Was there headlines all about foreclosures?
Henry:
Not a single one.
Kathy:
And in 2018, it was 362,000. Again, 227,000 today. And if you want to compare today to 2010 was the peak, 1,654,000. So don’t you go and say 2026 is like 2010, 1,650,000 and today 227,000. Can’t compare.
Henry:
Yeah, it’s not the same. Is there a problem in the housing market? Yeah, there’s a problem. There’s an affordability problem. Absolutely. Are there people who bought a house who then realized that taxes, insurance and your principle and it all go up over time and now they can’t afford their house? Yes, there’s a lot of people in that boat and I don’t want to make light of that. I’m not saying there’s not an affordability problem. I’m just saying that the number of foreclosures is not a telling sign for me that the world is ending.
Kathy:
Yeah. And if you’re a foreclosure buyer, if this is your industry, you haven’t had a great industry. I haven’t had a couple years. It’s been very, very low. So I suppose if you’re into that business, there are tens of thousands more people going into foreclosure. So again, not my business. I don’t know. James, do you buy foreclosures?
Henry:
I do.
James:
We don’t buy a lot of foreclosures. I mean, if they come into us, we will, but we don’t see a ton. If I looked at the last 10 foreclosures that I actually bought, they were actually investors in default with their hard money loans. They were not your traditional sellers. And that’s where I’m seeing most of the distress. The homeowners, the banks are still working with them quite a bit. We don’t even actively market to them. We’re known as a dependable home buyer and brokers with their clients will reach out to us with foreclosure clients. But I will say that where we are seeing a lot more surge in foreclosures up in the Northwest at least is because we’ll have one investor and all of a sudden they’ll have 15 to 20 properties all go into default at the same time with six different hard money lenders.
Henry:
Wow.
James:
And that’s where we’re seeing an uptick. But the problem is most of those properties, they’re in expensive debt. They’re compounding at 12 to 18% in default interest. There’s construction liens on them and there’s a bad construction plan on them. And unless the lender is going to take a note discount, you can’t buy them. And the one thing is, what I do remember is short sales were a pain in the butt back in 2008, nine and 10. You’d basically just throw offers out on 50 properties and maybe four would come back after six months. Hard money shorting is a lot quicker and there’s a deal to be made there. And so I do think we’re going to see some short sales going on in the
Henry:
Hard
James:
Money space and they will work deals with logic and if they can back it up with appraisals and actual facts, they look at it that way and they will slide. It’s a good thing to hit is hard money lenders in your market that have more distress going on, call them, see what they have. What do they want off their plate? There’s deals to be done. That has been where we’ve been buying most of them.
Henry:
I’ve bought a few foreclosures in the past couple of years, literally probably three, and they’ve all been homeowners, but we don’t actively market to them. They just come across my desk either through networking, somebody knows who I am and knows that they need us have a seller in a tough situation. And we’ve built a pretty good reputation. I don’t like to buy foreclosures for the payoff amount. I always like to pay extra so they walk away with something. And that helps people bring those deals to me because it helps their sellers because they can actually walk away with some money. I know a lot of people target foreclosures and just try to buy for the debt that’s owed. I always try to pay more.
Kathy:
Another thing that was interesting about this article, it says the average days to complete a foreclosure. How many days do you think?
James:
I bet you’re probably like 220 days.
Henry:
I was going to say six months.
Kathy:
This says 563 days to complete a foreclosure.
James:
Wild.
Kathy:
And that’s down, you guys. That’s down from
A few years ago. And I had heard that. I know there’s judicial states where the foreclosure has to go through a judge or there weren’t enough judges when there were so many foreclosures. But pre – GFC, before the foreclosure crisis of 2008, it was like what you just said. It was a couple hundred days was the average. So I think I said earlier that banks got, they learned that foreclosures are not in their best interest. They would rather work with this, I mean not always, but do these loan mods or I don’t know. It’s just complete reverse. It’s doubled since pre – GFC.
James:
Yeah, they definitely will work with a homeowner on it and homeowners need to explore every option if they’re in that situation.
Kathy:
Yes.
James:
But one thing as we were listening to this, we were talking about this in our sales meeting two days ago and it was a listed property. It was in foreclosure. And I said, “Hey guys, look, no matter what, if we’re going to write an offer on this, we are going out there, we’re waving inspection and we are giving them something 100% sure that we can close. You got to make sure that you can close the deal.” For all the wholesalers out there, if you’re tying up those properties, don’t tie those foreclosures up. Every day matters. Don’t burn their clock and don’t over promise. Make sure it’s a guaranteed thing for these people because they need to close. And so we literally had a long talk about that in my sales meeting today. Guys, if they want a higher price, give them the guaranteed close price because they need a guaranteed option.
And so just don’t tie people up, don’t waste people’s time. Time is valuable, especially when you’re in default. We’re taking a quick break. When we return, Henry is looking at the current housing market where growing inventory and stubborn mortgage rates are creating a new set of challenges and opportunities.
Welcome back to On the Market. Henry, what do we got?
Henry:
Yes, I brought an article from Redfin. The title of the article is Investor Pullback: Home Purchases Hit a 10-Year Low. Is this the setup smart investors have been waiting for? So this article is from Redfin and it talks about investor home purchases in the first quarter of 2026 fell 6% year over year. Now that’s investor home purchases fell 6% year over year. That’s its lowest level since 2020. And when you strip out all the pandemic numbers that were inflated and aren’t really telling to the true story here, you’d have to go all the way back to 2016 to find when investor purchases were this low. So that’s 10 years ago. It talks about some of the key points that are causing this. First and foremost is the math is hard for people. So at a 6.6% mortgage rate and median home prices up near 430,000, it’s just hard to make the numbers work unless you’re a super professional investor who’s sourcing their own direct to seller leads.
But for the normal everyday investor who’s just wanting to buy something on the market in a secondary town, it’s a whole lot harder to make those numbers work. Next is the new regulatory uncertainty because the Road Housing Act does restrict investors with 350 or more homes, but that regulation it’s alluding to might be scaring some of the smaller investors from getting into the space for fear of regulation that could hit smaller investors. We have been talking about on almost every show now, we’ve said it already on this show, this is the time to be buying, right? Everything in this article tells me that I need to be buying and buying conservatively, not buying anything, but the people that are winning right now are the professional investors, the people who know how to go and source a deal at a discount. And there’s more opportunity to land those deals because there’s less competition in the market.
This is the least amount of competition we’ve seen in the market since 2016, which is wild to think about. So if you can build up a strategy for sourcing deals at a discount, five to 10 years from now, you’re going to look like a frick-frecking genius. Now the catch is you’ve got to be able to maintain through the hard time to get there. So you can’t buy bad deals, you can’t buy thin deals, you’ve got to buy really good deals. But I think this article is good news for investors because this just spells opportunity to me.
James:
There’s so much opportunity and scared money doesn’t make money. So Henry, how has your buy box changed in the last 12 months? I mean, you got to reset your expectations.
Henry:
Yep. The product that I want to buy has essentially remained the same. What I’m willing to pay for it has changed drastically. We are underwriting so conservatively that I lose out on a lot of deals to investors who aren’t conservative. So what’s changed is I have to make more offers to land the same amount of deals I would because the competition that is in the market is willing to pay more than I’m willing to pay because they’re willing to be a little more risky. Also, the product I’m not buying right now, James, that I bought in the past is the flip house that can only be a flip. In other words, there’s no other exit. I’ve done a few flips where they were bigger flips, maybe they’re in a higher end of town, the numbers wouldn’t work for a rental, but it was such good margins on the flip that I did it.
I don’t do that deal anymore. Even if there’s money to be made, I leave that deal on the table because I have to be able to pivot and rent that thing out if it doesn’t sell, period. That’s the one thing that’s changed in my buy box.
James:
That is the safest thing you can do. Multiple exit strategies on any deal, whether it’s you’re buying a rental property and your rent’s drop and you can short-term rent it, midterm rent it with realistic. Is it a realistic product like you’re buying a rental property, how do you get multiple strategies? Buy something with location where there is demand for the midterm and the short term. Don’t go buy the rental that has no upside butt rental. Those are the things that we have to do. People got so used to cheap money and easy exits when in 2010 it was scrappy. It was like, how can we somehow turn a nickel out of this thing? And we had to do what we had to do, right? When you have a less favorable climate, you got to get scrappy.
Kathy:
And if you’re an investor, you need to think like an investor. You need to be the opposite of everything everybody else is doing. You need to look at the headlines and look underneath them, interpret it differently. Most headlines are for non-investors. They’re for everybody else. So don’t be afraid of distress. Distress is your friend. Distress is literally what makes you an investor. So when I hear questions like, oh, is it a bad time to buy? It’s like you’re not ready. If you are asking that question, you need more information. You’ve got to look for the distress and entrepreneurs fix that problem. Whatever that problem is, whatever. Like Henry, you were saying before, if somebody’s in distress losing their home to foreclosure, you’re going to help them. You’re going to find a way to help them get out of that home. For me, I’m looking at distress as a buy and hold investor, and I see builders in a lot of pain.
How can we help them move their inventory? How can we work with them to find out without lowering your prices, can you just pay our investors pay down their rates? So their rate is now three or 4% and their properties are cash flowing. Another pain point is insurance, huge pain point. Well, how can you negotiate? How can you find a better insurance agent? How can you buy property that’s not affected by it? Again, new builds have, I think it’s like 36% lower insurance costs because they’re built to the hurricane standards, fire standards, they’re just built better. So look for the distress and fix the problem. That is how you make money and don’t run away from it. Don’t run away from distress. Run towards it.
Henry:
That is a formula for profitability. And one other thing to think about, this article touches on a little bit, every major buying opportunity in real estate history has been preceded by a period when the institutional and professional investors stepped back. Look at 2009 through 2012, all the institutional professional investors, mom and pop investors, they stepped, they backed off. And then 2009 and 10 and 11, you could scoop up crazy deals if you had the cash to make them hold on through the remainder of the downtime. Because yes, you could buy a property super cheap then. The problem wasn’t buying it cheap. The problem was getting somebody to either rent it out for a price that was going to cover or being able to turn around and sell that thing. So you’ve got to be able to buy when the prices are low, when there’s less competition, but you have to hold through that short window and then you’ll be looking like a genius.
So this is a sign of hopefully some good times to come in the future. We’ll see, but that doesn’t really matter to me. What matters to me is can I buy now at a discount and can I hold it for the next five years and see where things go?
James:
We’ll be right back after the break. We’re asking, is cash still king and why finance buyers may have more power in today’s market? Welcome back to On the Market. We’ll finish off with my article and let’s start talking about why cash offers are losing some of its edge. The article that I brought in is cash is no longer king in home sales. And this is published by CNBC and it talks about that cash transactions are down. It says cash share fell down to 31.4%, but that’s only down 0.9% from last year. Because
Kathy:
You’re not going to read the article if they tell you that. That’s boring.
James:
No, cash is no longer king. Well, it’s slightly down, but – It’s
Henry:
Slightly less king. Cash is prince.
James:
It’s because people are making high interest on some other things. They don’t want to move it around right now, but it does talk about cash buyers are actually dropping out faster in the overall market decline. Total home sales during that same period were down 8.5% year over year, but this year it was 11.2%. And this all goes in relation of there’s just less investor transactions going on. And one thing that I did look into was what defines a cash sale? And a lot of people did consider that cash. I mean when you borrow from us, I mean we don’t have any appraisals, we’re just cash money to the bank, but it does get secured with a deed of trust. But with investor activity going down, for us, we’ve been really trying to take this information and use it as there’s less investor transactions going on, less transactions in general like Henry’s talking about, less cash getting thrown around.
It can make you very competitive in a market to buy some really good deals. And so everything that we’re writing up right now, we are writing up on a 14-day close with earnest money, non-refundable, and then we write it with a hard money loan, but we waive all contingencies in that. And so it’s true cash. There is no conditions to our funding. It’s 100% funding at this point. That has been able to get us some very good buys recently because people want dependability. The deal I just closed on yesterday, I paid 300 grand less for the house that I did around the corner that I have on the market right now. There is some deals out there, but you have to come in with cash or very dependable financing that is just like cash because you want to go supply and demand. Sellers have switched their tune quite a bit.
I mean, calling an off-market seller 24 months ago was like, “How much are you going to pay me?” Now they’re like, “Would you like to buy my house?” And so the message has changed, but then they want to make sure that it’s for real, and that can give you that competitive advantage to get the deal. If they want a quick close, there’s not a whole lot of people buying right now. Transactions are down, cash is down. Use it to your advantage because you either get terms or price if you’re a seller. And if you want that good term with no conditions close quick, then you got to take a haircut on your price. And so I think it’s the time to audit who your lenders are, who are you borrowing money from, how much access to cash do you have, and to make sure it’s dependable because when that home run deal crosses your plate, you don’t want to not be able to close.
Henry:
Yep, you’re right. This is the buyer’s time. And yes, as real estate investors, especially flippers, we think a lot about being on the sale side because that’s when we put the money in our pocket, but we don’t get to that point unless we’re buying. And right now in 41 of 50 states, buyers have the power, so go get you a deal.
Kathy:
Especially in multifamily, that’s why we started our multifamily fund to have cash ready because everyone’s waiting for these deals to come across, and you’ve got a lot of companies with deep pockets and cash and they’re going to make their move quickly as prices come down. We just found, I think I talked about it on a show prior, a building where we can get per door for 30% of what it was trading at before.
Henry:
Now
Kathy:
It needs work. Some of these deals have not been cared for because whether you’re in single family or multifamily, if you are running into trouble, if you don’t have enough cash, you can’t fix it. You get a little desperate and you just get anyone in there to rent. And so a lot of these multifamily do not have the highest level tenant and there’s a ton of deferred maintenance. So you need to know that before going into it. Distress means distress. There’s problems. So just because you get it at a discount doesn’t mean that’s truly the cost per door. You got to put some money into it. But if you can have cash ready, oh boy, oh boy, the deals are out there and they’re coming. It’ll be a good couple of years that these deals will be coming.
James:
I think that’s the biggest thing. When everyone’s saying the same thing, go opposite.
Kathy:
Do the opposite. Yes. Go rush
James:
Into data centers. Go rush into short term. It’s always those rushes and people rush this way. And it’s the same way when buyers rush out of the market, then there’s opportunity there and we’re seeing it. Some of the reasons that the cash has gone down also because some of the foreign money is not coming around anymore too. China is down 11% year over year on funds coming in. This went from the largest dollars and they brought in $7.6 billion in dollar volume. Canada is up though. The return is the top origin for cash buyers in the US.
Henry:
That’s because loans are crazy there, so you just got to pay cash anyway. There’s no 30-year fixed product there.
James:
There isn’t. They’re up 16%. And so this is how you can really get some good opportunities though. When we’re seeing fall, like Henry says, cash is down. As an investor, just take those steps to get prepared and that’s gunpowder, access to capital, and just so you can get in the deal. I know Kathy, you guys have had this fund.
Kathy:
Well, we were early. We were too early. A lot of people thought that these properties would come online last year and it’s taking a while. Sellers are not maybe as desperate as they need to be maybe because of those loan modifications or they’re taking all the cash flow and just hanging on, but it’s starting and we’re getting some stuff finally. I mean, we were underwriting. We were tossing out 95% of what was coming across the desk and the final 5%. We’d go to the sellers and say, and again, this is multifamily, but we’d go to the sellers and say, “This is the number that’s going to work. Your sales prices, it doesn’t matter what you paid. It doesn’t matter that it’s a 50% discount. It’s not. This is actually what it’s worth today.” And they’re having such a hard time seeing that. So you’re not really getting a deal, you’re just getting the property for what it’s worth right now.
So there’s still some adjusting that needs to happen and banks don’t love that either. So they’re extending pretending, but not as much as they were. Yeah, 2027 might be the year.
James:
But you’re ready.
Kathy:
But we’re ready. When it is. We’re ready.
James:
Right.That’s the thing. You don’t want to be going and asking for the money when it’s already going on, because by the time you get the money,
Kathy:
You’re going to get
James:
Too late.
Kathy:
That’s right.
James:
And so just be prepared, right? As investors, if we want to be in this business for the long term, we have to be prepared for every dip and cycle. And so just switch around your financing, talk to people, get access to capital, because when we see these gaps, there’s good opportunities in there. I can’t wait till Kathy comes in. She’s like, “I’m on a buy and spree.” And she’s buying way more
Kathy:
Money. We’re so ready. Me
James:
And Henry are going to have promo. It’s going to be great.
Kathy:
But a lot of people who did what I’m doing and they started these funds way too early, they are now in distress. You got to be careful of that falling knife. I know we’re always talking about getting the deals, but the underwriting still was too aggressive even on those.
James:
Yeah. And just because you have the money doesn’t mean you should spend it either.
Henry:
Yeah. I mean, I think that’s the gist of investing is to read your market, whether that’s stocks, real estate, crypto, whatever it is that you invest in. Read the market, figure out where the opportunities are, position yourself to be ready when the opportunity comes, because we don’t always know when the opportunity comes. It’s about preparation. And then when it does come, the ones who win are the ones who are prepared. These are just investing fundamentals. It doesn’t matter the investment vehicle. We just happen to choose real estate. There’s a lot of shift happening, but all that to me says someone’s going to make money. How do we figure out where that money’s going to be made and does it make sense for us to be in that space? That’s our job.
James:
Yep. Well, we’ll leave you here today. Kathy Henry, it’s always good. Chopping it up on what’s going on with the market and what you’re doing. Follow On the Market wherever you get your podcasts and subscribe to our YouTube channel for more real estate news analysis and investor strategy. I’m James Daynard. Thanks for joining us and we’ll see you next time on On the Market.
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