Foreclosure numbers today aren’t like 2008.
You may have seen headlines recently about the rise in foreclosures on the housing market. You may have felt some uncertainty about the housing market, especially if it’s something you’re looking into. To know the truth, it’s important to look at these reports in context. According to a report by ATTOM, a provider of property data, foreclosure filings have increased 8% over the past year and 2% compared with the previous quarter. Media headlines may draw attention to the increase in foreclosures, but reporting only on this number could cause concern that prices will crash. It’s not the dramatic increase headlines would have you believeIn recent years, foreclosures have been at record lows. In 2020 and 2021, forbearance programs and other relief options helped millions of homeowners remain in their homes and get back on their own during a difficult period. Home values were also rising, so many homeowners who would have faced foreclosure in other circumstances could leverage their equity to sell their homes rather than face foreclosure. Equity will continue to play a role in preventing people from entering foreclosure. Just because foreclosures have increased doesn’t mean that the housing market is in crisis. Clare Trapasso Executive News Editor of Realtor.com says: “Many foreclosures would have happened during the pandemic but were delayed due to federal, local, and state foreclosure moratoriums to keep people in homes. . . Real estate experts have said that this is not a repeat of The Great Recession. It’s not because scores of homeowners can’t pay their mortgage payments. Many lenders are now catching-up. In a recent article by Bankrate, they also explain: “In the years following the housing crash, millions upon millions of foreclosures flood the housing market, causing prices to fall. This is not the case anymore. Most homeowners have a healthy equity cushion in their home. Lenders didn’t file default notices at the height of pandemic, which pushed foreclosures to a record low in 2020. While there has been some slight increase in foreclosures, it is not as bad as it used to be. “Basically, there won’t be a sudden flood.” The graph below shows how much the situation has changed since the housing crash. The graph uses data from foreclosure filings in the first half of every year since 2008 to show that foreclosure activity has consistently been lower since the crash. While foreclosures are on the rise, it is clear that foreclosure activity today is nothing like what it was then. Today, foreclosures have dropped significantly from the high number reported during the housing crash. In addition to the factors listed above, this is also due to the fact that buyers today are better qualified and less likely default on their loans. The housing market is experiencing a rise in foreclosures. However, this is nowhere near the crisis level seen when the housing boom burst. This will not lead to a drop in home prices.
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