The Number of Foreclosures Is Not What It Was in 2008

If you have been following the news lately, you have probably seen articles claiming that the number of foreclosures in today's housing market is increasing. And that may leave you feeling a bit worried about what’s ahead, especially if you owned a home during the housing crash in 2008.

The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.

Here’s the latest information stacked against historical data to put your mind at ease.

The Headlines Make the Increase Sound Dramatic – But It’s Not

The increase the media is calling attention to is a little bit misleading. That’s because it’s comparing the most recent numbers to a time when foreclosures were at historic lows. And that lopsided comparison is making it sound like a much bigger deal than it actually is.

Back in 2020 and 2021, there was a moratorium and forbearance program that helped millions of homeowners avoid foreclosure during challenging times. That’s why the numbers  just a few years ago were so low.

Now that the moratorium has come to an end, foreclosures are resuming, which means numbers are rising. But it’s an expected increase, not a surprise, and not a cause for alarm. Just because foreclosure filings are up doesn’t mean the housing market is in trouble.

To demonstrate this, let us expand the comparison a little further. We will specifically go back to the 2008 housing crash, which many people fear will happen again.

The graph below uses research from ATTOM, a property data provider, to show foreclosure activity has been consistently lower since the crash in 2008:

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The data shows that things are not like they were before the housing crash. The bars in red are when The red bars indicate when there were more than 1 million foreclosure filings per year. ly 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

Putting the data into context is more important now than ever before. While foreclosures are expected to rise in the housing market, they are still far from the crisis levels seen when the housing bubble burst, and this will not result in a drop in home prices.

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