Some Highlights

• Did you know the equity you have in your current house can help make your move possible?
• Once you sell, you can use it for a larger down payment on your next home, so you’re borrowing less. Or, you may even have enough to be an all-cash buyer. 
• The typical homeowner has $298,000 in equity. If you want to find out how much you have, connect with a local real estate agent for a Professional Equity Assessment Report.

If you’ve been keeping up with the news lately, you’ve probably come across some articles saying the number of foreclosures in today’s housing market is going up. 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 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 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 numbers for just a few years ago were so low.

Now that the moratorium has come to an end, foreclosures are resuming and that 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 prove that to you, let’s expand the comparison out a bit more. Specifically, we’ll go all the way 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:

 

What the data shows is that things now aren’t anything like they were surrounding the housing crash. The bars in red are 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.”

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

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, and that won’t lead to a crash in home prices.

According to recent data from Fannie Mae, almost 1 in 4 people still think home prices are going to come down. If you’re one of the people worried about that, here’s what you need to know.

A lot of that fear is probably coming from what you’re hearing in the media or reading online. But here’s the thing to remember. Negative news sells. That means, you may not be getting the full picture. You may only be getting the clickbait version. As Jay Thompson, a Real Estate Industry Consultant, explains:

“Housing market headlines are everywhere. Many are quite sensational, ending with exclamation points or predicting impending doom for the industry. Clickbait, the sensationalizing of headlines and content, has been an issue since the dawn of the internet, and housing news is not immune to it.”

Here’s a look at the data to set the record straight.

Home Prices Rose the Majority of the Past Year

Case-Shiller releases a report each month on the percent of monthly home price changes. If you look at their data from January 2023 through the latest numbers available, here’s what you’d see:

 

What do you notice when you look at this graph? It depends on what color you’re more drawn to. If you look at the green, you’ll see home prices rose for the majority of the past year.

But, if you’re drawn to the red, you may only focus on the two slight declines. This is what a lot of media coverage does. Since negative news sells, drawing attention to these slight dips happens often. But that loses sight of the bigger picture. 

Here’s what this data really says. There’s a lot more green in that graph than red. And even for the two red bars, they’re so slight, they’re practically flat. If you look at the year as a whole, home prices still rose overall.

It’s perfectly normal in the housing market for home price growth to slow down in the winter. That’s because fewer people move during the holidays and at the start of the year, so there’s not as much upward pressure on home prices during that time. That’s why, even the green bars toward the end of the year show smaller price gains.

The overarching story is that prices went up last year, not down.

To sum all that up, the source for that data in the graph above, Case Shiller, explains it like this:

“Month-over-month numbers were relatively flat, . . . However, the annual growth was more significant for both indices, rising 7.4 percent and 6.6 percent, respectively.”

If one of the expert organizations tracking home price trends says the very slight dips are nothing to worry about, why be concerned? Even Case-Shiller is drawing your attention to how those were virtually flat and how home prices actually grew over the year.

Bottom Line

The data shows that, as a whole, home prices rose over the past year. If you have questions about what’s happening with home prices in your local area, connect with a trusted real estate professional.