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74 ere's little evidence to suggest a deluge of foreclosures is about to hit the market. Still, economic forecasts show that foreclosures are already on the rise and expected to tick back up again later this year or in early 2022. at means appraisers need to be ready. Here's the good news: the prognosis for 2022 is for a sound and strong housing market. Economists are calling for continued home price appreciation well into 2022 as demand for housing continues to be strong. ere is also evidence that the supply imbalance is beginning to correct itself with more owner-occupied inventory steadily increasing, which should alleviate some of the runaway house price increases we have seen in some markets. However, it's important to not read an increase in supply as a flood of homes suddenly comes onto the market and disrupts pricing. At most, what economists expect is a normalizing of the market that puts behind us the ultra-competitiveness we have seen in 2021. Against this backdrop, economists believe that any possible inventory coming to market as a result of homeowners exiting forbearance is a good thing. Distressed homeowners can take advantage of current market dynamics and sell their homes for top dollar. e reality is that there will be some homeowners that won't be able to reconcile payments. We are already seeing defaults increase. According to ATTOM Solutions, default notices, scheduled auctions, or bank repossessions spiked 34% in this year's third quarter. at momentum is likely to continue well into the new year following nearly a year and a half of a foreclosure moratorium. How much of a spike will really depend on how lenders choose to address distressed borrowers who are behind on their payments, but it is not going to be anywhere near the figures we saw during the Great Recession of 2009. We are in a unique situation today, as underwriting has been much stronger than it was in the previous period of rapid inflation for the housing crisis. We're in a situation today where we've never been, and we haven't been this prepared to be able to absorb downturn. Nonetheless, appraisers should be ready to pivot to address the eventuality of increased foreclosures and appraisals for loan default activity. at means being objective and completing the appraisal process just as they would for any other transaction type, whether it's for a refinance or a purchase. at may sound easy, but appraisers need to be mindful that they aren't approaching foreclosures with a potential bias towards the transaction type. For foreclosures, one of the biggest limitations for appraisers is that they won't have access to the property. at will require extra steps on the part of the appraiser to try to ascertain the condition of that property, whether it's through increased due diligence of the town records for building permit activity or any other data collection activity. Generally, appraisals in preparation for foreclosure are done on an exterior basis, and they'll be driving by the property or someone Feature By: Ken Dicks A KEEN EYE It's critical to correctly value distressed assets as they come out of foreclosure.