Single-family rental mortgage default threat decreases in 1H21

The mortgage default risk for single-family homes decreased by 16% in the first half of 2021 compared to the previous six months, according to RealtyTrac. But 45 of the country's top 100 counties still have a higher than average chance of these loans not working.

The average default risk score in June was 36.7 compared to 43.9 in January. The score is calculated using three criteria measured at the district level: the percentage of rental apartments, the relative unemployment rate and the mortgage lending value for apartments with mortgage loans.

Falling unemployment rates caused the score to change, said Rick Sharga, executive vice president of RealtyTrac.

"But even with the decline, the risk of default is still very real among these rental homeowners, especially in California and Florida," he said in a press release.

Of the 10 counties with the highest risk scores in June, three were in California and two in Florida. The Sunshine State also contains eight of the country's 45 counties with above-average risk. Seven of these counties are in California.

But the county with the highest DRS is New York (Manhattan) with a Risk Score of 73.7, followed by Horry in South Carolina with 66.3 and Kern in California with 66.

At the other end of the scale is Salt Lake County, Utah, with a score of 6.7, followed by Gwinnett, Georgia, with 16.6, and Travis County, Texas, with 18.8.

"When the economy recovers, it makes sense to see less risk of default for rental property landlords," Sharga said. “But many landlords still need financial relief after the government's 18-month eviction ban.

Almost 90% of single-family homes are owned by mom-and-pop investors who own less than ten properties; many of which are backed by a mortgage, RealtyTrac said.

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