Foreclosure Activity Is Still Lower than the Norm

Have you seen headlines about the increase in foreclosures in today’s housing market? If so, they may make you uneasy about what’s ahead. But remember, these clickbait titles don’t always give you the full story.

If you compare the current numbers with what usually happens in the market, you’ll see there’s no need to worry.

Putting the Headlines into Perspective

The increase the media is calling attention to is misleading. They only compare the most recent numbers to when foreclosures were at historic lows. And that’s making it sound like a bigger deal than it is.

The suspension and forbearance program helped millions of homeowners in 2020 and 2021. It allowed them to stay at home and recover from a challenging period.

When the suspension ended, an expected rise in foreclosures was expected. But just because foreclosures are up doesn’t mean the housing market is in trouble.

Historical Data Shows There Isn’t a Wave of Foreclosures

Instead of comparing today’s numbers with the last few abnormal years, it’s better to compare to long-term trends – specifically the housing crash – since that’s what people worry may happen again.

Take a look at the graph below.

It uses foreclosure data from ATTOM (a property data provider) to show lower foreclosure activity since the 2008 crash.

U.S Foreclosure Activity Increases From 2022 But Still Below Pre-Pandemic Levels - KM Realty Group LLC, Chicago

So, while foreclosure filings are up in the latest report, it’s clear this is nothing like it was back then.

We’re not even back at the levels we’d see in more normal years, like 2019.

As Rick Sharga, Founder and CEO of the CJ Patrick Company, explains:

Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”

That’s largely because buyers today are more qualified and less likely to default on their loans. Delinquency rates are still low, and most homeowners have enough equity to keep them from foreclosure.

As Molly Boesel, Principal Economist at CoreLogic, says:

“In October, the number of people behind on their mortgage payments in the US stayed the same as last year. The number of people seriously behind on payments also remained extremely low. People behind on payments are finding other ways to avoid losing their homes.

While increasing, the data shows a foreclosure crisis is not where the market is today or where it’s headed.

The data shows that the foreclosure crisis is not increasing and does not reflect the market’s current or future direction.

Bottom Line

The housing market has more foreclosures now, but it’s better than when the housing bubble burst. If you have questions about the housing market in Chicago, Illinois, connect with our top-rated real estate agents!