Are Foreclosures on the Rise?

Andrea Ballesteros February 1, 2024

In the fast-paced world of real estate, headlines can sometimes stir up unnecessary concerns, and recent discussions about a surge in foreclosures are no exception. Before diving into a sea of worry, let's put these attention-grabbing titles into perspective.

1. Misleading Comparisons: The media's spotlight on increased foreclosures might seem alarming at first glance, but it's essential to dissect the information. The sensational headlines often compare today's figures to a time when foreclosures were at historic lows, creating a skewed narrative that might leave you feeling uneasy.

2. The Moratorium Impact: It's crucial to acknowledge the role of the 2020 and 2021 moratorium and forbearance programs. These initiatives provided a crucial lifeline for millions of homeowners, allowing them to weather the storm during challenging times. The expected uptick in foreclosures following the moratorium's end doesn't equate to a housing market in distress.

3. Historical Trends Speak Louder: To get a clearer picture, let's shift our focus from recent anomalies to long-term trends, particularly the aftermath of the 2008 housing crash. Foreclosure data from ATTOM reveals a consistent decrease in foreclosure activity (depicted in orange) since the red-flagged period of 2008. We are far from the alarming levels witnessed during the housing crisis.

4. Qualified Buyers and Low Delinquency Rates: Contrary to doomsday scenarios, the current situation isn't a repeat of history. Foreclosure activity is only at 60% of pre-pandemic levels, a testament to today's more qualified buyers who are less likely to default on their loans. Low delinquency rates and homeowners having substantial equity act as bulwarks against a foreclosure surge.

5. Expert Insights: Rick Sharga, Founder and CEO of the CJ Patrick Company, emphasizes that we are far from crisis levels. The data indicates a rise in foreclosures, but it's a far cry from the tumultuous period of the housing bubble burst. Molly Boesel, Principal Economist at CoreLogic, highlights the overall health of mortgage delinquency rates, debunking fears of an imminent crisis.

6. Connecting for Clarity: In conclusion, while the housing market is experiencing a foreseeable increase in foreclosures, it's vital to understand that we are not on the brink of a crisis. If the headlines have left you with questions or concerns about the real estate landscape, I'm here to connect and provide clarity. In the dynamic world of Southern California real estate, a measured understanding ensures a smooth and confident journey for all. Let's navigate this together!

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