With rising costs making everyday life more expensive, it’s understandable to question how this might impact the housing market. Concerns about homeowners falling behind on their mortgages and triggering a foreclosure wave are common. However, the latest data reveals a reassuring reality: foreclosures are not surging, and the market remains stable.

Today’s Market vs. 2008: A Key Difference

The housing market today is fundamentally different from the conditions that led to the 2008 crash. Research from ATTOM, a leading property data provider, highlights that foreclosure starts are significantly lower than during the crash era. While there has been a slight uptick compared to the unusually low levels during the pandemic moratorium, the current numbers are far below the crisis levels seen in 2008 (see graph below):

The moratorium in 2020 and 2021 (highlighted in white) temporarily halted foreclosure proceedings, explaining the low figures during those years. Now that the moratorium has ended, the slight rise is a natural adjustment rather than a sign of instability.

Why Foreclosures Remain Low

Despite higher living costs, most homeowners are better positioned today thanks to substantial equity. Equity serves as a financial cushion, helping homeowners weather economic challenges. As Bankrate explains:

“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes.”

This equity enables many struggling homeowners to sell their properties instead of facing foreclosure. During the 2008 crash, many homeowners were underwater—owing more on their mortgages than their homes were worth. Today, the situation is vastly different.

What’s Next for the Housing Market?

While rising living costs remain a concern, a surge in foreclosures is unlikely. Homeowners’ equity levels are providing a buffer, keeping foreclosure filings low. Additionally, today’s real estate market benefits from a better balance between supply and demand compared to the conditions leading up to the 2008 crash.

Bottom Line

Yes, inflation has made everyday expenses like gas and groceries more challenging, but this doesn’t signal a repeat of the 2008 foreclosure crisis. With strong equity positions, homeowners are in a much more secure financial situation, keeping the housing market stable. If you have questions about current market conditions or how they may impact your real estate plans, let’s connect to discuss your options.