Fear Not: Insights on Today's Foreclosure Headlines

According to the Year-End 2022 U.S. Foreclosure Market Report, the number of foreclosure writings has increased by 115% from 2021, but is still down 34% from 2019 levels. It's important to understand this increase in context, as the numbers were significantly lower in 2020 and 2021 due to relief options for homeowners such as forbearance programs. With a strong economy and efforts from the government and mortgage industry, millions of homeowners were able to stay in their homes and avoid foreclosure. Additionally, rising home values allowed many homeowners to sell their houses instead of facing foreclosure. Despite the recent increase in foreclosure writings, it's important to note that current levels are still far below the 2010 record high of 2.9 million foreclosures.

Bill McBride, the founder and author of Calculated Risk, reminds us to keep perspective as foreclosures are rising. According to him, while we will see an increase in foreclosures in the next year, it will not be a major wave like we saw after the housing bubble burst. This means we can expect a steady increase, rather than a rapid decrease in prices, which was seen during the housing bust. It's important to keep this in mind as we navigate this change in the housing market.

Bottom Line

Yes, it's important to understand the context when evaluating the current housing market. The rise in foreclosures is a concern, but it's not at crisis levels seen during the housing bubble burst. As a result, it's unlikely to cause a significant drop in home prices.