With everything feeling more expensive these days, it’s natural to worry about how rising costs might impact the housing market. Many people are concerned that high prices and higher budgets could cause more homeowners to fall behind on their mortgage payments. This could lead to a wave of foreclosures.
But before you start worrying about a housing market crash, here is a look at what’s really happening. The good news is the latest foreclosure data shows there’s no wave on the horizon.
Today’s Market is Different from 2008
Let’s ease those fears by looking at the bigger picture. The graph below uses research from ATTOM, a property data provider, to show that the number of homeowners starting the foreclosure process is nowhere near what we saw coming out of 2008. Back then, there was a big spike in how many foreclosures were happening. Today, the number is much lower – it’s even dropped some in the latest report. There’s a big difference between what’s happening now, and what happened when the housing market crashed.
Just in case you’re wondering why the number of foreclosure filings has ticked up slightly since 2020 and 2021, here’s what you need to know. During those years, there was a moratorium designed to help millions of homeowners avoid foreclosures in challenging times. That’s why the numbers for just a few years ago were so incredibily low. If you look further back, it’s clear overall foreclosure filings are down significantly.
And if you’re wondering how are there fewer foreclosures today, even when the cost of living has gotten so pricey? Here’s your answer. One of the main reasons is that homeowners today have a lot more equity built up in their homes than they did back in 2008.
This equity acts like a safety net and is allowing many homeowners to avoid going into foreclosure if they are facing financial hardships. Even it someone is struggling to make their monthly payments, they may be able to sell their home and avoid foreclosure altogether. This is a far cry from the conditions during the crash when homeowners owed more on their mortgages than their homes were worth.
What’s Ahead for the Housing Market
It’s true that today’s higher cost of living across the board is a challenge for many people right now. But this doesn’t mean we’re heading for a surge in foreclosures.