MBS Highway content shared by Rudy Benitez, Mortgage Loan Originator NMLS # 279367, AnnieMac Home Mortgage
Recent media headlines spread fear about a pending collapse in the housing market, with the news that foreclosures in the first half of 2022 are up 150% from last year.While it’s true foreclosures have risen compared to last year, a look back at the data in recent years confirms the situation is far from dire.
The chart from ATTOM Data compares foreclosure activity in the first six months of the year going back to 2008.
As you can see, there were 164,581 foreclosures from January to June of this year versus 65,082 foreclosures seen in the first half of 2021. The record low level of foreclosures seen last year was due in large part to the foreclosure moratoriums because of the pandemic.
Since these moratoriums ended, an increase in foreclosures this year from last year’s record low was to be expected.
Does the 150% increase that we’ve seen this year signal a collapse in the housing market?
Looking closely at the data, you can see that it puts us right on par with the 165,530 foreclosures seen in 2020. And remember, foreclosure moratoriums were also in place in 2020.
In 2019, which was a more normal year, the number of foreclosures seen during the first half of this year was around 44% less than the 296,458 reported in 2019.
And if we compare the number of foreclosures this year to when the housing market was really in trouble during the Great Recession, it’s a fraction of the number seen in 2008, 2009 and 2010, when foreclosures topped one million each year.
Today, homeowners have record levels of equity in their homes, and lending conditions are much stricter now than in the late 2000s. These factors will keep the number of foreclosures in check.
While it’s true higher mortgage rates and higher home prices have slowed demand for homes, record low inventory should remain supportive of home prices, which will also curb foreclosures.
Data released in September from the National Association of Realtors showed there was just a 3.3 months’ supply of existing homes available for sale at the end of July, well below the six months considered a balanced level.
As the data shows, the number of foreclosures this year is significantly less than any time from 2008 to 2019.
Source: MBS Highway on Sept. 1, 2022
AnnieMac Home Mortgage is an Equal Housing Lender. AnnieMac Home Mortgage, 211 N. Florence Street, Suite 102 and 103, Casa Grande AZ 85122 NMLS# 338923. Arizona Mortgage Banker License #0926586.
