Foreclosure Rates Remain Below Historical Norms

Noticed headlines recently about rising foreclosures in the current housing market? These reports might stir some concern about the future market conditions. However, it’s crucial to look beyond the sensationalist titles for the complete picture.

Understanding the Reality Behind the Headlines

The narrative around an increase in foreclosures often lacks context. Media reports tend to compare recent figures against periods of historically low foreclosure rates, painting a more dramatic picture than warranted.

During 2020 and 2021, foreclosure moratoriums and forbearance programs significantly aided homeowners, helping them navigate through tough times without losing their homes. The cessation of these programs naturally led to a rise in foreclosure numbers, yet this uptick does not signify a market downturn.

Comparing to Historical Trends, Not Anomalies

A more accurate analysis involves comparing current data against long-term trends, particularly against the backdrop of the 2008 housing crash, which many fear might recur. However, data from ATTOM, a property data provider, illustrates that foreclosure activity has consistently remained below the peak levels seen in 2008 and has not returned to the “normal” pre-pandemic levels, such as those in 2019.

Rick Sharga, Founder and CEO of the CJ Patrick Company, notes:

“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”

This is attributed to stricter lending standards ensuring borrowers are better positioned to meet their loan obligations. Additionally, CoreLogic’s Principal Economist, Molly Boesel, highlights the continued low rates of mortgage delinquency, indicating a stable market where homeowners are finding ways to avoid foreclosure:

“U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.”

Bottom Line

The rise in foreclosures, while notable, does not approach the crisis levels experienced in the past. The market remains resilient, supported by strong borrower qualifications and significant homeowner equity. For those concerned about the market’s direction, it’s important to seek comprehensive insights beyond the headlines from real estate market experts like the ones at Countryside Homes NJ and RE/MAX Select.

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