Cesi Pagano & Associates

Orange County Luxury Real Estate

  • Sellers
    • Safe Seller Program
    • Guaranteed Buyout Program
    • How Much is My Home Worth?
    • Foreclosures & Short Sales For Sellers
    • Featured Listings
    • Just Sold
    • Resources
    • EASY EXIT GUARANTEE
  • Buyers
    • Virtual Home Buying Program
    • Guaranteed Buyout Program
    • MLS Search
    • Featured Listings
    • Build Your Dream Home
    • International Buyers
    • Global Home Search
    • Relocation
    • Loan Prequalification
    • Short Sales & Foreclosures For Buyers
    • EASY EXIT GUARANTEE
  • Communities
    • South Orange County
      • Aliso Viejo
      • Coto De Caza
      • Dana Point
      • Foothill Ranch
      • Irvine
      • Ladera Ranch
      • Laguna Hills
      • Laguna Niguel
      • Lake Forest
      • Mission Viejo
      • Rancho Mission Viejo
      • Rancho Santa Margarita
      • San Clemente
      • San Juan Capistrano
    • Coastal Orange County
      • Dana Point
      • Laguna Beach
      • Newport Beach
      • San Clemente
    • North Orange County
      • Costa Mesa
  • Our Team
    • Meet Cesi Pagano
    • Meet The Associates
    • Keller Williams International
    • Join Our Team
    • Reviews
  • Cesi’s Corner
    • Blog
      • Listing Blog
      • Events Blog
      • Real Estate Essentials Blog
      • Community Blog
    • Vendor Connections
    • Real Estate News
    • Concierge Services
    • California Insider
    • Video Testimonials
  • Contact Us
    • Recommend Us

Follow Us On

  • Facebook
  • Twitter
  • YouTube
  • LinkedIn
  • Instagram
  • Pinterest

Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market

November 30, 2022

 

With the rapid shift that’s happened in the housing market this year, some people are raising concerns that we’re destined for a repeat of the crash we saw in 2008. But in truth, there are many key differences between what’s happening today and the bubble in the early 2000s.

One of the reasons this isn’t like the last time is the number of foreclosures in the market is much lower now. Here’s a look at why there won’t be a wave of foreclosures flooding the market.

Not as Many Homeowners Are in Trouble This Time

After the last housing crash, over nine million households lost their homes due to a foreclosure, short sale, or because they gave it back to the bank. This was, in large part, because of more relaxed lending standards where people could take out mortgages they ultimately couldn’t afford. Those lending practices led to a wave of distressed properties which made their way into the market and caused home values to plummet.

But today, revised lending standards have led to more qualified buyers. As a result, there are fewer homeowners who are behind on their mortgages. As Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), says:

“For the second quarter in a row, the mortgage delinquency rate fell to its lowest level since MBA’s survey began in 1979 – declining to 3.45%. Foreclosure starts and loans in the process of foreclosure also dropped in the third quarter to levels further below their historical averages.”

There Have Been Fewer Foreclosures over the Last Two Years

While you may have seen recent stories about the number of foreclosures rising today, context is important. During the pandemic, many homeowners were able to pause their mortgage payments using the forbearance program. The program gave homeowners facing difficulties extra time to get their finances in order and, in many cases, work out a plan with their lender.

With that program, many were concerned it would result in a wave of foreclosures coming to the market. That fear didn’t materialize. Data from the New York Fed shows there are still fewer foreclosures happening today than before the pandemic (see graph below):

Why There Won’t Be a Flood of Foreclosures Coming to the Housing Market | MyKCM

That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019.

And most importantly, the number we’re seeing now is still far below the number we saw during the market crash (shown in the red bars in the graph). The big takeaway? Don’t let a headline in the news mislead you. While foreclosures are up year-over-year, historical context is essential to understanding the full picture.

Most Homeowners Have More Than Enough Equity To Sell Their Homes

Many homeowners today have enough equity to sell their homes instead of facing foreclosure. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home. And if they’ve stayed in their homes even longer, they may have even more equity than they realize. As Ksenia Potapov, Economist at First American, says:

“Homeowners have very high levels of tappable home equity today, providing a cushion to withstand potential price declines, but also preventing housing distress from turning into a foreclosure. . . the result will likely be more of a foreclosure ‘trickle’ than a ‘tsunami.’”

 

A recent report from ATTOM Data explains it by going even deeper into the numbers:

“Only about 214,800 homeowners were facing possible foreclosure in the second quarter of 2022, or just four-tenths of one percent of the 58.2 million outstanding mortgages in the U.S. Of those facing foreclosure, about 195,400, or 91 percent, had at least some equity built up in their homes.”

An Important Note

 

If you see headlines about the increasing number of foreclosures today, remember context is important. While it’s true the number of foreclosures is higher now than it was last year, foreclosures are still well below pre-pandemic years. If you have questions, let’s connect.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

Related

Filed Under: Blog, Real Estate Essentials Blog

Leave a Reply Cancel reply

Properties of the Month

Contact

Cesi Pagano & Associates
Phone: (949) 370-0819
Email: Cesi@CesiPagano.com
Keller Williams Luxury International
Keller Williams Realty Laguna Beach

The Easy Button of Real Estate Searches

Download the KW App

Follow Us On Social Media

  • Facebook
  • Twitter
  • YouTube
  • LinkedIn
  • Instagram
  • Pinterest

Recent Posts

  • Wellness Trends That Will Keep You Recharged in 2023
  • Butter Rum Cookies
  • Orange County Real Estate Market Update January 2023
  • Want To Sell Your House? Price It Right.
  • Think Twice Before Waiting for 3% Mortgage Rates

Company Info

Cesi Pagano & Associates
27941 La Paz Road Suite #C
Laguna Niguel 92677
Phone: (949) 370-0819
Email: Cesi@CesiPagano.com

Cesi Pagano DRE 01043716                         
Keller Williams Realty DRE 01934115 

Recent Posts

  • Wellness Trends That Will Keep You Recharged in 2023
  • Butter Rum Cookies
  • Orange County Real Estate Market Update January 2023
  • Want To Sell Your House? Price It Right.
  • Think Twice Before Waiting for 3% Mortgage Rates

Contact Us

Copyright © 2023 · Real Estate Website by imFORZA

Cesi Pagano & Associates. All Rights Reserved.

en English
ar Arabiczh-CN Chinese (Simplified)nl Dutchen Englishfr Frenchde Germanit Italianpt Portugueseru Russianes Spanish