Why the Housing Market is not Set to Crash in 2023
With recent inflation and the rise of mortgage rates, many fear we will have a housing market crash similar to 2009. Despite this, we are not seeing a lot of foreclosures impact homeowners. We are in a different market than we were in the crash of the earlier decade. This week, the team at Foundation Mortgage in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee discusses why we will not see a wave of foreclosures in 2023.
Foreclosures not Indicative of Coming Crash
Millions of Americans lost their home to foreclosure in the last housing market crash. Shaky underwriting practices and a large appetite for mortgages helped contribute to this. Many people wonder if rising mortgage rates and cost of living will create a new set of foreclosures. However, data does not show a similar pattern of distressed properties. Today’s tighter mortgage underwriting standards are helping protect people from bad mortgages. Fortunately, that has led to a lower rate of delinquency on loan payments. In addition, less foreclosures are being started, in progress, or completed than in 2008-09.
In the housing market, COVID also impacted things, but not at the same level as 2009. Many mortgage protection programs helped stop the tidal wave of evictions. Lenders and borrowers worked out payment plans and forbearance allowances that were successful. In addition, foreclosures were temporarily paused, giving people time to get their lives back in order. Once forbearance was lifted, the foreclosures that did occur did not match the numbers seen back in the housing crash. Many news headlines still say that foreclosures are up, but when looking at the historic context, it is clear a crash is not as evident.
People Still Have Equity in Their Homes
If homeowners do need to get out, data shows that many have enough equity in their home to sell as opposed to foreclose. Since home prices have skyrocketed, so too have the value and equity in homes. Many that have been living in their home a long time have equity to tap and weather downturns. This is true even if home prices decline, which is very unlikely to happen. Even though foreclosures are up this year from last year, data shows that people can withstand the pressure and we will avoid a wave of millions of foreclosures. The housing market is still very hot in many regions of the country.
The professionals at Foundation Mortgage are here to help you sell your home or leverage its worth in in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee. Contact one of our helpful staff to learn more about selling or taking out an equity loan today!