Foreclosure Activity Is Still Lower than the Norm
Have you seen headlines talking about the increase in foreclosures in today’s housing market? If so, they may leave you feeling a bit uneasy about what’s ahead. But remember, these clickbait titles don’t always give you the full story.
The truth is, if you compare the current numbers with what usually happens in the market, you’ll see there’s no need to worry.
Putting the Headlines into Perspective
The increase the media is calling attention to is misleading. That’s because they’re only comparing the most recent numbers to a time where foreclosures were at historic lows. And that’s making it sound like a bigger deal than it is.
In 2020 and 2021, the moratorium and forbearance program helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period.
When the moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market is in trouble.
Historical Data Shows There Isn’t a Wave of Foreclosures
Instead of comparing today’s numbers with the last few abnormal years, it’s better to compare to long-term trends – specifically to the housing crash – since that’s what people worry may happen again.
Take a look at the graph below. It uses foreclosure data from ATTOM, a property data provider, to show foreclosure activity has been consistently lower (shown in orange) since the crash in 2008 (shown in red):
So, while foreclosure filings are up in the latest report, it’s clear this is nothing like it was back then.
In fact, we’re not even back at the levels we’d see in more normal years, like 2019. As Rick Sharga, Founder and CEO of the CJ Patrick Company, explains:
“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”
That’s largely because buyers today are more qualified and less likely to default on their loans. Delinquency rates are still low and most homeowners have enough equity to keep them from going into foreclosure. As Molly Boesel, Principal Economist at CoreLogic, says:
“U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.”
The reality is, while increasing, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.
Even though the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst.
If you have questions about what you’re hearing or reading about the housing market, get in touch today.
Strategic Tips for Buying Your First Home
Buying your first home is a big, exciting step and a major milestone that has the power to improve your life. As a first-time homebuyer, it’s a dream you can make come true, but there are some hurdles you’ll need to overcome in today’s housing market – specifically the limited supply of homes for sale and ongoing affordability challenges.
So, if you’re ready, willing, and able to buy your first home, here are three tips to help you turn your dream into a reality.
Save Money with First-Time Homebuyer Programs
Paying the initial costs of homeownership, like your down payment and closing costs, can feel a bit daunting. But there are many assistance programs for first-time homebuyers that can help you get a loan with little or no money upfront. According to Bankrate:
“. . . you might qualify for a first-time homebuyer loan or assistance. First-time buyer loans typically have more flexible requirements, such as a lower down payment and credit score. Many help buyers with closing costs and the down payment through grants and low-interest loans.”
To find out more, talk to your state’s housing authority or check out websites like Down Payment Resource.
Expand Your Options by Looking at Condos and Townhomes
Right now, there aren’t enough homes for sale for everyone who wants to buy one. That’s pushing home prices up and making affordability tight for buyers. One way to deal with that issue and find a home right now is to consider condos and townhomes. Realtor.com explains:
“For many newbies, it might just be a matter of making a shift toward something they can better afford—like a condo or townhome. These lower-cost homes have historically been a stepping stone for buyers looking for a less expensive alternative to a single-family home.”
One reason why they may be more affordable is because they’re often smaller. But they still give you the chance to get your foot in the door and achieve your goal of owning a home and building equity. And that equity can help fuel your move into a larger home later on if you decide you need something bigger in the future. Hannah Jones, Senior Economic Analyst at Realtor.com, says:
“Condos can help prospective homebuyers who perhaps have a smaller budget, but who are really determined to get a foothold in the market and start to accumulate some equity. It can be a really great entry point.”
Consider Pooling Your Resources To Buy a Multi-Generational Home
Another way to break into the market is by purchasing a home with friends or loved ones. That way you can split the cost of things like the mortgage and bills, to make it easier to afford a home. According to Money.com:
“Buying a home with another person has some obvious advantages in the mortgage department. With two incomes in the mix, buyers can likely qualify for a larger mortgage — a big helpp in today’s high-cost market.”
By exploring first-time homebuyer assistance, condos, townhomes, and multi-generational living, it can be easier to find and buy your first home.
We are prepared to explore options whenever you are ready.
Your Home Is a Powerful Investment
Going into 2023, there was a lot of talk about a possible recession that would cause the housing market to crash. Some in the media were even forecasting home prices would drop by as much as 10-20%—and that might have made you feel a bit unsure about buying a home.
But here’s what actually happened: home prices went up more than usual. Brian D. Luke, Head of Commodities at S&P Dow Jones Indices, explains:
“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years.”
To put last year’s growth into context, the graph below uses data from Freddie Mac on how home prices have changed each year going back to 1980. The dotted line shows the long-term average for appreciation:
The big takeaway? Home prices almost always go up.
As an article from Forbes says:
“. . . the U.S. real estate market has a long and reliable history of increasing in value over time.”
In fact, since 1980, the only time home prices dropped was during the housing market crash (shown in red in the graph above). Fortunately, the market today isn’t like it was in 2008. For starters, there aren’t enough available homes to meet buyer demand right now. On top of that, homeowners have a tremendous amount of equity, so they’re on much stronger footing than they were back then. That means there won’t be a wave of foreclosures that causes prices to fall.
The fact that home values went up every single year except those four in red is why owning a home can be one of the smartest moves you can make. When you’re a homeowner, you own something that typically becomes more valuable over time. And as your home’s value appreciates, your net worth grows.
So, if you’re financially stable and prepared for the costs and expenses of homeownership, buying a home might make a lot of sense for you.
Home prices almost always go up over time.
That makes buying a home a smart move, if you’re ready and able. Connect with us to talk about your goals and what’s available in our area.
Why Today’s Seller’s Market Is Good for Your Bottom Line
Thinking about selling your house and wondering if now’s a good time to do it? Here’s what you need to know. Even though the number of homes for sale has been growing this year, there still aren’t enough homes on the market for all the buyers who want to buy.
So, what does that mean for you? To keep it simple, it means it’s still a seller’s market. Here’s how it works:
- A neutral market is when supply and demand is balanced. Basically, there are enough homes to meet buyer demand based on the current sales pace, and home prices hold fairly steady.
- A buyer’s market is when there are more homes for sale than there are buyers. When that happens, buyers have more negotiation power because sellers are willing to make compromises to close the deal. In a buyer’s market, sellers may have to do price cuts to re-ignite interest in their home, and prices may go down. But we haven’t seen this for years since there are so few homes available to buy.
- In a seller’s market, it’s just the opposite. When the supply of homes for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which can lead to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer upfront. This could drive the final sale price of your house up.
The graph below uses data from the National Association of Realtors to show just how deep into seller’s market territory we still are today:
What Does This Mean for You?
The market is still working in your favor. If you lean on an agent for advice on how to get your house list ready and how to price it competitively, it should get a lot of attention from eager buyers. That means you’ll likely get multiple offers and see your house sell quickly and for top dollar. As a recent article from Ramsey Solutions explains:
“A seller’s market is when demand for homes is higher than the supply of homes. And that’s still the case right now.
If you’re planning to sell your house, you can expect to sell it fairly quickly for close to your asking price—as long as your asking price is realistic for the current market.”
Today’s housing market still favors sellers. If you’re ready to sell your house, reach out today so you can start making your moves.
