If you have been following the news recently, you might have seen articles about an increase in foreclosures and bankruptcies. That could be making you feel uneasy, especially if you’re thinking about buying or selling a house.
Even though the numbers are going up, the data shows the housing market isn’t headed for a crisis.
Foreclosure Activity Rising, but Less Than Headlines Suggest
In recent years, the number of foreclosures has been very low. That’s because, in 2020 and 2021, the foreclosure program and other relief options were put in place to help many homeowners stay in their homes during the tough time.
When the moratorium ended, there was an expected rise in foreclosures. But just because they’re up, that doesn’t mean the housing market is in trouble.
Check out the graph below using research from ATTOM, a property data provider. It looks at properties with a foreclosure filing going all the way back to 2005. It shows that there have been fewer foreclosures since the crash.
As you can see, foreclosure filings are inching back up to pre-pandemic numbers. However, they are still way lower than when the housing market crashed in 2008. Today, the tremendous amount of equity American homeowners have in their homes can help people see and avoid foreclosure.
The Increase in Bankruptcies Isn’t Dramatic Either
As you can see below, the financial trouble many industries and small businesses felt during the pandemic didn’t cause a dramatic increase in bankruptcies. Still, the number of bankruptcies has gone up slightly since last year, nearly returning to 2021 levels. That isn’t a cause for alarm.
The numbers for 2021 and 2022 were lower than more typical years. That’s because the government provided trillions of dollars in aid to individuals and businesses during the pandemic. So, instead let’s focus on the bar for this year and compare it to the bar on the far left (2019). It shows the number of bankruptcies today is still nowhere near where it was before the pandemic. Both of these two factors are reasons why the housing market isn’t in danger of crashing.
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