Is there a wave of foreclosures coming to the real estate market?
When the pandemic hit in 2020, many experts thought the housing market would crash. They feared job loss and economic uncertainty would lead to a wave of foreclosures, similar to when the housing bubble burst over a decade ago. The forbearance program changed that, according to Keeping Current Matters, the real estate research group. It provided much-needed relief for homeowners so a foreclosure crisis wouldn’t happen again.
Forbearance enabled nearly five million homeowners to get back on their feet in a time when having the security and protection of a home was more important than ever. Those in need were able to work with their banks and lenders to stay in their homes rather than go into foreclosure. Since so many people can stay in their homes and work out alternative options, there won’t be a wave of foreclosures coming to the market. And while rising slightly, foreclosures today are still nowhere near the levels seen in the housing crisis.
In addition, lending standards have improved significantly since the housing bubble burst, and that’s one more thing keeping foreclosure filings low. Homeowners have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Thanks to their equity and the current undersupply of homes on the market, homeowners can sell their houses, make a move, and not have to go through the foreclosure process that led to the housing market crash in 2008.
The forbearance program was a game changer for homeowners in need. It’s one of the big reasons why we won’t see a wave of foreclosures coming to the market.