Foreclosure Stats Differ from 2008 Crash

Lately, you might have seen news stories talking about more and more houses being taken over by banks due to unpaid loans. This might worry you, especially if you remember the big housing crash in 2008. But let's take a closer look at what's really going on.

Yes, there's been an increase in the number of foreclosed homes, but it's not as bad as it sounds. See, they're comparing today's numbers to a time when hardly any homes were being taken over. So, it seems like a big jump, but it's not really.

Back in 2020 and 2021, there were programs that helped a lot of people who couldn't pay their mortgages because of the pandemic. That's why the number of foreclosures was so low then. Now that these programs have ended, more homes are being foreclosed, but it's not a surprise. It's what was expected.

Let's look back even further, all the way to 2008 when the housing market crashed. Compared to back then, the number of foreclosures today is much lower. That's because most people who own homes now have paid off a good chunk of what they owe, unlike back in 2008 when lots of people lost their homes because they couldn't pay their loans.

So, the situation today isn't like it was during the big crash. Most homeowners today have enough money in their homes to stop them from losing them. And that's good news for both homeowners and the housing market.

In short, while there are more foreclosures happening now, it's not as bad as it was in 2008. So, there's no need to worry about another big crash in the housing market.

market.No Caption Received

What the data shows is that things now aren’t anything like they were surrounding the housing crash. The bars in red are when there were over 1 million foreclosure filings a year. In 2023, there were roughly 357,000. That’s a big difference.

A recent article from Bankrate explains one of the reasons things aren’t like they were back then:

In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”

Basically, foreclosure activity is nothing like it was during the crash. That’s because most homeowners today have enough equity to keep them from going into foreclosure. And that’s a really good thing for homeowners and for the market.

The reality is, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.

Bottom Line

In conclusion, while it's true that foreclosure rates are rising, it's important to understand that the current situation is not a repeat of the 2008 housing crash. Back then, millions of homes were lost, and the market suffered greatly. Today, most homeowners have built up equity in their homes, providing a safety net against foreclosure. So, although we may see more foreclosures in the near future, it's unlikely to lead to a catastrophic housing market collapse. Keeping this perspective in mind can help alleviate concerns and provide reassurance about the stability of the housing market.

Post a Comment