If you’ve been following the news lately, you’ve probably come across articles claiming that foreclosures are on the rise in today’s housing market. This can make you a little nervous about what’s to come, especially if you owned a home during the housing crisis of 2008. In fact, despite the data surge, the market does not appear to be headed for a foreclosure crisis.
Here you’ll find up-to-date information combined with historical data, giving you peace of mind.
The headlines make growth look good, but it isn’t.
To say that media is getting bigger is a bit misleading. That’s because it compares recent numbers to a time when bankruptcies were at historic lows. And these side-by-side comparisons make it seem like a much bigger problem than it already is.
In 2020 and 2021, there were foreclosure and forbearance programs that helped millions of homeowners avoid foreclosure during these difficult times. That is why a few years ago their number was very small.
Now that the moratorium is over, foreclosures are on the rise again, which means the number of foreclosures is increasing. However, this is only an expected increase and is neither surprising nor alarming. An increase in bankruptcy filings doesn’t mean the housing market is struggling. To demonstrate this, let’s expand the comparison a bit. In reality, this takes us back to the housing crisis of 2008. Because people are worried that it could happen again. The chart below, using research from real estate data provider ATTOM, shows a steady decline in foreclosure activity since the 2008 financial crisis.
The data shows that the situation is not like a housing crisis. Red bars indicate over 1 million bankruptcy filings per year. In 2023, there were about 357,000. This is a big difference. A recent Bankrate article explains one reason why this is not the case.
“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”
Simply put, a foreclosure action is not the same as what happened at the time of the accident. This is because most homeowners today have enough assets to avoid bankruptcy. This is good for homeowners and good for the market.
In fact, the data shows that the foreclosure crisis is not where the market is headed or is heading.