The Difference in Foreclosure Figures: Not Reminiscent of the 2008 Crash

If you’ve been following the headlines lately, you’ve probably seen some articles about the increasing number of foreclosures in today’s housing market. And that might have you feeling a bit concerned about what’s to come, especially if you were a homeowner during the housing crash in 2008.

The truth is, while there is an uptick, the data suggests we’re not headed toward a foreclosure crisis.

Here’s the most recent information compared to historical data to help ease your mind.

The Headlines May Sound Alarming – But They’re Not The increase in attention from the media might seem a bit exaggerated. That’s because it’s comparing today’s numbers to a time when foreclosures were at record lows. This skewed comparison makes it seem like a bigger issue than it really is.

In 2020 and 2021, there were programs like moratoriums and forbearance plans that helped many homeowners avoid foreclosure during difficult times. That’s why the numbers from just a few years ago were so low.

Now that the moratoriums have ended, foreclosures are resuming, resulting in an increase in numbers. But it’s an anticipated rise, not a sudden spike, and not cause for panic. Just because foreclosure filings are up doesn’t mean the housing market is in dire straits.

To illustrate this point, let’s broaden the comparison a bit further. Specifically, let’s go back to the housing crash in 2008 – the event that many fear might repeat.

The data shows that the current situation is nothing like it was during the housing crash. The red bars represent years with over 1 million foreclosure filings annually. In 2023, there were approximately 357,000. That’s a significant difference.

A recent article from Bankrate highlights one of the reasons why the current situation is different from back then:

“In the aftermath of the housing crash, millions of foreclosures flooded the housing market, causing prices to plummet. That’s not the case now. Most homeowners have substantial equity in their homes.” In essence, foreclosure activity today is nothing like what it was during the crash. This is largely because most homeowners today have enough equity to prevent foreclosure. And that’s excellent news for homeowners and the market alike.

In reality, the data indicates that we’re not facing a foreclosure crisis now or in the future.

Bottom Line Now, more than ever, it’s crucial to put the data into perspective. While the housing market is experiencing an expected increase in foreclosures, it’s nowhere near the crisis levels seen during the housing bubble burst, and this won’t lead to a crash in home prices.

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