Hey, have you come across those headlines buzzing about the surge in foreclosures in today's housing market? It might be making you a tad anxious about what's coming up. Just keep in mind, those attention-grabbing titles don't always spill the whole story.

Honestly, if you take a look at the current figures and compare them to the usual market trends, you'll find there's really no reason to stress about it.

Putting the Headlines into Perspective

You know, the whole hype the media is creating about the spike is kind of deceiving. They're just comparing the latest numbers to a time when foreclosures were unusually low, making it sound way more dramatic than it actually is.

So, in 2020 and 2021, thanks to the moratorium and forbearance program, tons of homeowners got a helping hand, keeping them in their homes and giving them a chance to bounce back during those tough times.

So, when the moratorium wrapped up, everyone anticipated a surge in foreclosures. But here's the thing – just because foreclosures are on the rise doesn't automatically spell trouble for the housing market.

Historical Data Shows There Isn’t a Wave of Foreclosures

Instead of looking at today's figures and stacking them up against the weird past couple of years, it makes more sense to compare them to the long-term trends. Especially, checking them against the housing crash, which is what folks are concerned might repeat itself.

Check out this graph down below. It pulls in foreclosure data from ATTOM, a property data provider, to illustrate that foreclosure activity has consistently stayed lower (highlighted in orange) since the crash in 2008 (shown in red):

So, even though there's an uptick in foreclosure filings in the recent report, it's pretty evident that it's nothing close to what it was back in the day.

Actually, we haven't even reached the levels you'd see in more regular years, like 2019. Rick Sharga, the Founder and CEO of the CJ Patrick Company, breaks it down like this:

“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .””

— Rick Sharga, Founder and CEO of the CJ Patrick Company

The main reason for that is because today's buyers are generally more qualified and less prone to default on their loans. Delinquency rates are still pretty low, and most homeowners have enough equity to steer clear of foreclosure. Molly Boesel, Principal Economist at CoreLogic, puts it this way:

““U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.””

— Molly Boesel, Principal Economist at CoreLogic

The truth is, even though it's on the rise, the data clearly indicates that a foreclosure crisis is not what the market is dealing with right now or what it's gearing up for.

Bottom Line

Even though the housing market is going through an anticipated increase in foreclosures, it's definitely not hitting the crisis levels we saw during the housing bubble burst. If you've got questions about what's going on in the housing market, feel free to reach out, and let's chat.