If you’re anything like me, the word “foreclosure” immediately brings back memories of the 2008 financial crisis, where we saw countless Americans lose their homes. But before you hit the panic button, let’s take a deep breath and look at the actual foreclosure numbers today versus those from 2008. The good news? It’s not the end of the world.
First off, let’s acknowledge the elephant in the room: Yes, 2020 has been a dumpster fire of a year. But amidst all the chaos, the last thing we need is another financial collapse. Luckily, foreclosure numbers today aren’t even close to what they were back in 2008. According to ATTOM Data Solutions, in August 2020, U.S. foreclosure filings were at a 15-year low, with just over 11,000 recorded defaults. Compare that to March 2010 when there were over 367,000 recorded defaults. So, take a deep breath, people.
One of the biggest reasons for the low foreclosure rates is due to action taken by the government. One of the most significant measures has been the CARES Act, which offered various forms of aid and protection to homeowners affected by COVID-19. One of the main provisions of the CARES Act was the placement of a 60-day moratorium on foreclosures, which has since been extended to December 31, 2020. This has bought many homeowners some much-needed time to get back on their feet.
Another factor contributing to the low foreclosure rate is the current state of the housing market. Due to low-interest rates and a shortage of inventory, house prices have remained relatively stable in 2020. According to the National Association of Realtors, the median existing-home price for all housing types in August was $310,600, up 11.4% from August 2019. This means that many homeowners who may have lost their jobs due to the pandemic have some equity in their homes, making it less likely for them to fall into foreclosure.
Moreover, the current mortgage system is a lot more stringent than what was in place before the recession of 2008. After the housing crisis of the early 2000s, the government implemented stricter lending regulations to prevent risky lending practices that led to the housing bubble. Today, borrowers are subjected to rigorous income and credit checks, making it far less likely for someone to get approved for a loan they can’t afford down the road.
In short, the sky isn’t falling just yet. Foreclosure numbers today are nowhere near the same as during the 2008 recession. That being said, it’s still important to keep an eye on the situation and be proactive about your finances. If you’re struggling to make mortgage payments, there are various options available to you. Contact your lender and see if you qualify for any assistance programs. Remember, the housing market is cyclical, and just because it’s stable now, doesn’t mean it will stay that way forever. Stay vigilant, stay positive, and keep on top of your financial game.
