Recent headlines about the climbing number of foreclosures in today’s housing market may leave you with questions if you’re considering buying a house. It’s essential to understand what this means if you want to know the truth about what’s happening. According to a recent report from ATTOM, a property data provider, foreclosure filings have increased by 6% compared to the previous quarter and 22% since one year ago. Media headlines that only report the numbers may generate worry and make you hesitant to buy a home for fear of a potential price crash. However, while there is an increase, the data suggests that the market is not heading towards a foreclosure crisis. To put this in context, let’s examine the latest information and how it compares to previous years.
It Isn’t the Dramatic Increase Headlines Would Have You Believe
The number of foreclosures had hit record lows in recent years due to the forbearance program and other relief options for homeowners, which helped millions of people stay in their homes during a challenging period in 2020 and 2021. Additionally, rising home values allowed many homeowners to sell their homes and leverage their equity instead of facing foreclosure. Looking ahead, equity will continue to be a factor that can prevent foreclosures. As the government’s moratorium on foreclosures came to an end, there was an anticipated increase in foreclosures, but this does not indicate a troubled housing market. According to Clare Trapasso, Executive News Editor at Realtor.com, foreclosures may be up, but it does not mean the housing market is in trouble.
According to experts, there is no reason to panic, at least not yet, as foreclosure filings have begun to rise after the federal foreclosure moratorium ended. The moratorium was put in place during the early days of COVID-19 when millions of Americans lost their jobs, to prevent a wave of homeowners from losing their properties. However, some of these proceedings would have taken place during the pandemic, but they were delayed due to the moratorium. Therefore, the current rise in foreclosure filings can be seen as a catch-up from the delayed proceedings, rather than an indicator of a new foreclosure crisis.
According to Rob Barber, CEO of ATTOM, the increase in foreclosure filings can be attributed to rising unemployment rates, delayed proceedings due to government intervention, and ongoing economic challenges. However, many homeowners still have significant home equity, which may help in preventing a flood of foreclosures. To demonstrate how different the current situation is compared to the housing crash, a graph below shows that foreclosure activity has been lower since the crash, by looking at properties with a foreclosure filing going all the way back to 2005.
Foreclosure activity now is not like it was during the housing crisis, despite the increase in foreclosures. In addition to the reasons mentioned earlier, this is also because today’s buyers are more qualified and less likely to default on their loans. The number of foreclosures today is much lower than the record-high number reported during the housing market crash.
Final Thoughts
Presently, it is crucial to put the data into context. Although the housing market is experiencing a rise in foreclosures, it is nowhere near the crisis levels seen when the housing bubble burst, and this is not expected to lead to a crash in home prices.
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Tue, 02 May 2023 00:31:15 +0000
