Should We Expect Flood of Foreclosures in the Housing Market?
3 Reasons Why There Won't Be Flood Of Foreclosures Coming Anytime Soon
People have been wondering if we're destined to repeat the housing market crash we saw in 2008 due to the rapidly shifting market we are in today. But in reality, there are many key pointers that indicate this year is different and the crash won't happen anytime soon.
Take a look at the 3 reasons why there won’t be a wave of foreclosures flooding the market.
1. Fewer Homeowners Are In Trouble This Time
Due to foreclosures and short sales after the last market crash, over nine million households lost their homes. The major reason why this happened is because of the relaxed lending standards - where people can easily take out mortgages which they can't afford. This caused properties to make their way into the market and resulting home values to plummet.
Today, lending standards have become stricter and led to more qualified buyers. As a result, there are fewer homeowners are behind on their mortgages.
2. Fewer Foreclosure Over The Last Two Years
During the pandemic, homeowners were abble to pause their mortgage payments using forbearance program - this gave homeowners work out a plan with their lender. With this program, there were many concerns if that would cause wave of foreclosures to the housing market.
Although recent stories have shown that the number of foreclosures are rising today, there are still fewer foreclosures happening today than before the pandemic and we are still well below what we saw during 2008 market crash.
3. Homeowners Have More Equity To Sell Their Home
Many homeowners have enough equity to sell rather than face foreclosure. This is because of the rising home value over the past years. The longer homeowners stay in their home, the more the equity they could gain.
If you're worried about the increasing number of foreclosures today, we are still well below pre-pandemic years.