Don’t Expect a Flood of Foreclosures

August 16, 2023

Don’t Expect a Flood of Foreclosures

Don’t Expect a Flood of Foreclosures




The rising cost of just about everything from groceries to gas right now is leading to speculation that more people won’t be able to afford their mortgage payments. And that’s creating concern that a lot of foreclosures are on the horizon. While it’s true that foreclosure filings have gone up a bit compared to last year, experts say a flood of foreclosures isn’t coming.

Take it from Bill McBride of Calculated Risk. McBride is an expert on the housing market, and after closely following the data and market environment leading up to the crash, he was able to see the foreclosures coming in 2008. With the same careful eye and analysis, he has a different take on what’s ahead in the current market:

There will not be a foreclosure crisis this time.

Let’s look at why another flood is so unlikely.

There Aren’t Many Homeowners Who Are Seriously Behind on Their Mortgage Payments

One of the main reasons there were so many foreclosures during the last housing crash was because relaxed lending standards made it easy for people to take out mortgages, even if they couldn't show that they’d be able to pay them back. At that time, lenders weren’t being very strict when assessing applicant credit scores, income levels, employment status, and debt-to-income ratio.

But now, lending standards have tightened, leading to more qualified buyers who can afford to make their mortgage payments. And data from Freddie Mac and Fannie Mae shows the number of homeowners who are seriously behind on their mortgage payments is declining (see graph below):

Molly Boese, Principal Economist at CoreLogicexplains just how few homeowners are struggling to make their mortgage payments:

May’s overall mortgage delinquency rate matched the all-time low, and serious delinquencies followed suit. Furthermore, the rate of mortgages that were six months or more past due, a measure that ballooned in 2021, has receded to a level last observed in March 2020.”

Before there can be a significant rise in foreclosures, the number of people who can’t make their mortgage payments would need to rise. Since so many buyers are making their payments today, a wave of foreclosures isn’t likely.

Bottom Line

If you’re worried about a potential flood of foreclosures, know there’s nothing in the data today to suggest that’ll happen. In fact, qualified buyers are making their mortgage payments at a very high rate.


Recent Blog Posts

Real Estate Is Still the Best Long-Term Investment [INFOGRAPHIC]

June 14, 2024

Homebuilders Aren’t Overbuilding, They’re Catching Up

June 13, 2024

Home Prices Aren’t Declining, But Headlines Might Make You Think They Are

June 12, 2024

Savings Strategies Every First-Time Homebuyer Needs To Know

June 11, 2024

If you’re considering selling your house on your own as a “For Sale by Owner” (FSBO), you want to think about if it’s really worth the extra stress. Getting the Price Right Setting the right price for your house is important. And, if you’re selling your house on your own, two common issues can happen. You might ask for too much money (overpricing). Or you might not ask for enough (underpricing). Either can make it hard to sell your house. To avoid these problems, team up with a real estate agent. Agents know how to figure out the perfect price because they have a deep understanding of the local housing market. Understanding and Performing Paperwork Selling a house involves a bunch of paperwork and legal documentation that has to be just right. There are a lot of rules and regulations to follow, and that makes it a bit tricky for homeowners to manage everything on their own. Without a pro by your side, you could end up facing liability risks and legal complications. Real estate agents are experts in all the contracts and paperwork needed for selling a house. They know the rules and can guide you through it all, reducing the chance of mistakes that might lead to legal problems or delays. So, instead of dealing with the growing pile of documents on your own, team up with an agent who can be your advisor, helping you avoid any legal bumps in the road. Selling a house on your own can cost you a lot of time and stress. DM me so you have help with all the finer details, including setting the right price, handling all the paperwork, and so much more. That way we can take that stress off of your plate. #spinellagroup #yourtrustedrealestateguy #yourtrustedrealestateteam #spokerealestate #siliconvalley #siliconvalleyhomes #thebayarea #thebayareahomes #sellyourhouse #realestateagent #keepingcurrentmatters

June 10, 2024

The Wealth-Building Power of Homeownership [INFOGRAPHIC]

June 7, 2024

The Sweet Spot for Buying Luxury Homes

June 5, 2024

What To Expect if You Buy or Sell a Home This June

June 4, 2024

More Than a House: The Emotional Benefits of Homeownership

June 3, 2024

Let's Talk

You’ve got questions and we can’t wait to answer them.