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Notebook and Pen

MY REAL ESTATE BLOG

Foreclosure Forecast: Don't Expect a Flood!



With the rapid shift in the housing market during the last half of 2022, you may

have heard rumors that a deluge of foreclosures is imminent, perhaps mimicking

the crash of 2008.


However, the circumstances of 2008 and our current market are vastly different.


Fewer Homeowners are Behind on Their Mortgages


During the housing crash of 2008, over nine million homeowners lost homes due

to foreclosure or short sales. This crash was spurred by poor lending practices and

overextended borrowers. The wave of distressed properties on the market caused a

sharp decline in home prices.




Today’s lending standards have required that buyers are fully qualified, resulting in fewer borrowers falling behind on their mortgages. The mortgage delinquency rate has fallen to its lowest since 1979!



Fewer Foreclosures in the Last Two Years


Remember that context is vital when considering foreclosure statistics. Although

foreclosures are up from last year, they remain near record lows. Pandemic relief

allowed mortgage forbearance to provide homeowners the opportunity to get their

feet back underneath them or to work out payment plans with their lenders. Many

people worried that after the end of mortgage forbearance, a tsunami of

foreclosures would flood the market. It simply hasn’t been the case. In fact, current

data shows that there are fewer foreclosures happening today than pre-pandemic.

Why is this so?


Homeowners Have Equity




Even if homeowners find it necessary to sell their homes due to impending

foreclosure, many homeowners today have plenty of equity to sell their homes and avoid foreclosure.






Ksenia Potapov, Economist at First American, says:

Homeowners have very high levels of tappable home equity today, providing a

cushion to withstand potential price declines, but also preventing housing distress

from turning into a foreclosure. . . the result will likely be more of a foreclosure

‘trickle’ than a ‘tsunami.’”


The Summary


Don’t be misled by the headlines and remember that context is vital as you

interpret market statistics. Foreclosure rates remain stable and well below pre-

pandemic numbers. And as always, if you have questions, please don’t hesitate to

reach out. I’d love to help you navigate the current market. (206) 261-2068

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Content by Remington Crispeno Team Seattle Realtors

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