Foreclosure Activity Is Still Lower than the Norm

In recent headlines, there has been talk of a surge in foreclosures in the current housing market, sparking concerns among homeowners. However, it's crucial to delve deeper into the data and separate fact from sensationalized headlines. Let's understand the reality behind the numbers and put the current situation into perspective. 

Putting the Headlines into Perspective

The increase in foreclosures that the media is highlighting can be misleading. The comparison is often made to a time when foreclosures were at historic lows, creating a perception that the situation is more dire than it actually is. 

In 2020 and 2021, the housing market faced unprecedented challenges, but government interventions such as moratoriums and forbearance programs helped millions of homeowners stay afloat. While the end of these measures did result in an anticipated rise in foreclosures, it's essential to recognize that this doesn't necessarily signify trouble for the overall housing market. 

Historical Data Shows There Isn't a Wave of Foreclosures

To gain a more accurate understanding, we should compare current numbers not only with recent abnormal years but also with long-term trends, specifically looking back to the housing crash of 2008. Foreclosure data from ATTOM, a trusted property data provider, reveals that foreclosure activity has consistently remained lower since the 2008 crash. 

While the latest reports show an increase in foreclosure filings, the levels are far from what was experienced during the housing crisis. In fact, we haven't even reached the foreclosure levels observed in more normal years, such as 2019. According to Rick Sharga, Founder and CEO of the CJ Patrick Company, "Foreclosure activity is still only at about 60% of pre-pandemic levels."

Qualified Buyers and Low Delinquency Rates

One key factor contributing to the market's resilience is the quality of today's homebuyers. They are more qualified, less likely to default on their loans, and generally have sufficient equity to prevent foreclosure. Delinquency rates remain low, and most homeowners in later stages of delinquency are exploring alternatives to defaulting on their home loans, as noted by Molly Boesel, Principal Economist at CoreLogic.

In Conclusion

Despite the expected rise in foreclosures, the housing market is far from experiencing a crisis comparable to the housing bubble burst. The data indicates that the current situation is manageable, and the market is on a more stable trajectory.

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