As reported in The South Florida Business Journal.

I remember the old days, back in 2008, when the housing market was starting its crash. There were conferences with “experts” who showed up with all sorts of charts tracking the history of recessions dating back to WWII. They showed the angle of the decline and then the length of time it took to recover. Some recoveries were V-shaped; others were U-shaped. Many said that most recessions last around six months and that by the spring of 2009, things would be right as rain.

Little did they know it would be the mother of all recessions. Back then, the fundamentals of the economy were built on a crumbling foundation. Subprime mortgages and other flimsy economic practices led to what we now call the Great Recession.

Fast forward to 2020, and here we are again: an economic collapse the size of which has not been seen since the 1929 Great Depression.

This COVID-19 crisis was a perfect storm. Economically, it hit us in our weakest spot: the service sector. Over the past few decades, the U.S. economy has been shifting away from manufacturing to a service-based economy. Consider the changing face of strip retail centers: Instead of retailers selling goods, many of the storefronts show service businesses such as salons, dentists, optometrists and restaurants.

Plus, with low-cost airfare, people were traveling everywhere. Cruising was one of the most enjoyable and least expensive vacations you could take. This crisis has decimated those businesses, along with the service employees, many of whom rely on every paycheck to live.

Back in March, there were a multitude of rescue programs designed to keep businesses running and the unemployed housed and fed. Those dollars have run out. The additional unemployment protection, payroll protection programs and more have dried up.

• According to the Mortgage Bankers Association, the share of late FHA loans rose to almost 16% in the second quarter, up from 9.7% in the previous first three months. That’s the highest level in records dating back to 1979.

• According to a Census Bureau survey, more than 20% of households were concerned that they wouldn’t make their monthly rent or mortgage payment in June. Some eviction bans have ended, and others will end soon. As a result, Americans will once again lose their homes.

• According to a study by the National Low Income Housing Coalition, up to 40 million people (across 17 million households) will be evicted before the end of the year.

All of this will have a trickle-down effect on the economy. Residential renters and retail tenants will stop making rent payments, and office buildings will see higher vacancies. As a result, property owners won’t be able to make their mortgage payments, leading to foreclosures.

And it’s already happening: Mall owner CBL Properties is nearing bankruptcy. Mall of America is behind on its mortgage and is fighting foreclosure. The way I see it, all the signs are there for the ripple effects of this economic slowdown to lead to an uptick in foreclosures.

Back in the day, circa 2010, when there were massive foreclosures in the South Florida condo market, many wealthy real estate investors went out and purchased distressed properties. I remember reading about one group that pooled $1 billion to buy up huge lots of condos. Be prepared for that to happen again. Investors with dollars are always on the lookout for opportunities.

I hope my doom-and-gloom predictions are wrong — but in my opinion, all of the signs point to a rough autumn ahead.

Mark Weithorn, President, DPI Showcase Web Sites. Mark is a software developer, creating internet products for Realtors.

https://www.bizjournals.com/southflorida/news/2020/09/18/are-foreclosures-on-the-horizon.html?iana=cco_landing_news