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  • Writer's pictureDebi Haning

The Current Housing Market: Debunking Foreclosure Fears

In recent times, the cost of living has been steadily rising, affecting everything from groceries to gas prices. This upward trend has led to concerns about whether more individuals will struggle to afford their mortgage payments, possibly resulting in a surge of foreclosures. While it's true that foreclosure filings have seen a slight increase compared to the previous year, experts assert that we're not headed for a foreclosure crisis. One voice in the housing market, Bill McBride of Calculated Risk, who accurately predicted the 2008 crash, offers a different perspective based on careful analysis: "There will not be a foreclosure crisis this time.”

Let's delve into the reasons why this assertion holds weight and why the likelihood of a flood of foreclosures is minimal.

Stable Mortgage Payment Landscape

During the housing crash of 2008, the prevalence of foreclosures was fueled by lenient lending standards that allowed people to secure mortgages without demonstrating the ability to repay them. Lenders were lax in assessing crucial factors like credit scores, income levels, employment status, and debt-to-income ratios. In contrast, lending standards today have become more stringent, resulting in a pool of qualified buyers who can comfortably manage their mortgage payments.

Evidence from Freddie Mac and Fannie Mae indicates a decline in the number of homeowners seriously behind on their mortgage payments. This is crucial to understanding the current landscape. As Molly Boese, Principal Economist at CoreLogic, explains, "May's overall mortgage delinquency rate matched the all-time low, and serious delinquencies followed suit. Furthermore, the rate of mortgages that were six months or more past due, a measure that ballooned in 2021, has receded to a level last observed in March 2020." In essence, fewer homeowners are struggling to keep up with their mortgage payments, pointing towards a stable situation.

The Role of Qualified Buyers

For a foreclosure crisis to take place, a significant number of individuals must be unable to meet their mortgage obligations. The encouraging news is that a large portion of buyers is successfully making their payments today. This trend of responsible payments underscores the fact that the conditions are different from those leading up to previous crises. Tightened lending standards have paved the way for a cohort of buyers who are better equipped to handle their financial commitments.

Conclusion: A Bright Outlook

If concerns about a potential wave of foreclosures are plaguing your thoughts, rest assured that the current data does not support such apprehensions. Unlike the past, today's housing market is characterized by qualified buyers who are diligently fulfilling their mortgage responsibilities. This level of stability has been reinforced by prudent lending practices and stricter evaluation of borrowers' financial capabilities.

For any queries or further information, please feel free to reach out to me at 303-960-8252 or visit my website at Remember, the current housing market shows promise, and fears of a foreclosure crisis are unfounded. Stay informed and make confident real estate decisions.



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