Foreclosure Numbers Are Nothing Like the 2008 Crash
If you’ve been keeping up with the news lately, you’ve probably found some articles saying the number of foreclosures in today’s housing market is increasing. And that may leave you worried about what’s ahead, especially if you owned a home during the housing crash of 2008.
While the number of foreclosures is increasing, the data shows that a foreclosure crisis is not where the market is headed.
Here’s the latest information stacked against the 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 is.
A moratorium and forbearance program in 2020 and 2021 helped millions of homeowners avoid foreclosure during challenging times, which is why the numbers for just a few years ago were so low.
Now that the moratorium has ended, foreclosures are resuming, and that means numbers are rising. But it’s an expected increase, not a surprise or cause for alarm. Because foreclosure filings are up, it doesn’t mean the housing market is in trouble.
Let’s expand the comparison a bit more to prove that to you. Specifically, we’ll go back to the housing crash in 2008 – since that’s what people worry may 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:
The data shows that things now aren’t anything like they were surrounding the housing crash. The bars in red were 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.”
Foreclosure activity is nothing like it was during the crash. That’s because most homeowners today have enough equity to keep them from foreclosure. And that’s a perfect thing for homeowners and the market.
The reality is that the data shows a foreclosure crisis is not where the market is today or where it’s headed.
Bottom Line
Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, which won’t lead to a crash in home prices.
