Friday, October 25, 2024 / by Dick Keenan
Why Today’s Foreclosure Numbers Don’t Signal a Crash
With prices on the rise, it’s easy to wonder if higher costs could lead to more foreclosures. Many people are concerned that tighter budgets might result in missed mortgage payments, triggering a spike in foreclosures and causing a housing market crash.
However, the latest foreclosure data suggests otherwise: there’s no indication of an impending wave of foreclosures.
What Makes Today’s Market Different from 2008
Taking a closer look at the big picture can help ease concerns. Research from ATTOM, a property data provider, shows that current foreclosure activity is a fraction of what it was in 2008. Back then, there was a significant rise in foreclosures, which contributed to the housing market crash. Today, not only are foreclosures much lower, but they’ve actually decreased slightly in recent reports.
You may notice that foreclosure numbers have ticked up a bit since 2020 and 2021, but that’s largely because there was a temporary moratorium during the pandemic, allowing homeowners extra time to avoid foreclosure. Looking further back, the trend is clear: foreclosure filings are far below crisis levels.
Why Foreclosures Remain Low Despite Rising Living Costs
So, how are foreclosures still low even as living costs increase? A major reason is that today’s homeowners have far more equity in their homes than they did in 2008. This equity acts as a safety net, giving homeowners more options if they face financial challenges. If they need to sell, they’re often able to do so without falling into foreclosure, avoiding the market pressures that contributed to the crash.
What’s Next for the Housing Market
While today’s cost of living is a challenge, it doesn’t mean we’re headed toward a foreclosure surge. The equity cushion most homeowners now have is keeping foreclosure rates low and giving them options that weren’t available during the 2008 crisis.
Bottom Line
Although everyday costs are high, the housing market is not on the brink of another foreclosure crisis. Today’s homeowners are in a stronger financial position than they were during the last crash, largely thanks to significant home equity.