Understanding the Current Foreclosure Numbers: A Far Cry from the 2008 Crisis

Lisa Mailhot  |  July 24, 2023


Understanding the Current Foreclosure Numbers: A Far Cry from the 2008 Crisis


If you've been following recent news, you may have seen headlines about an increase in foreclosures in today's housing market. Understandably, this might leave you feeling uncertain, especially if you're considering buying a home. However, it's crucial to look at the context behind these reports to grasp the reality of the situation.

According to a recent report from ATTOM, foreclosure filings have gone up by 2% compared to the previous quarter and 8% compared to last year. While media attention is drawing focus on this increase, reporting solely on the numbers might generate unnecessary worry about a potential market crash. In reality, while foreclosures are on the rise, it does not indicate a foreclosure crisis like what occurred in the past.

We should examine the most recent data with its context to understand how it contrasts with previous years.

The Divergence from 2008

Over the past few years, foreclosure rates have reached historic lows. This is primarily due to the implementation of the forbearance program and various relief options in 2020 and 2021, which assisted millions of homeowners in retaining their homes during a challenging period. Simultaneously, the appreciation of home values allowed many homeowners who might have otherwise faced foreclosure to utilize their home equity and opt to sell their properties instead. Looking ahead, equity will remain a significant factor in preventing people from falling into foreclosure.

With the expiration of the government's moratorium, an anticipated increase in foreclosures occurred. However, it's essential to note that this rise in foreclosures does not necessarily indicate trouble for the housing market. As stated by Clare Trapasso, Executive News Editor at Realtor.com:

Many of these foreclosures would have occurred during the pandemic, but were put off due to federal, state, and local foreclosure moratoriums designed to keep people in their homes . . . Real estate experts have stressed that this isn’t a repeat of the Great Recession. It’s not that scores of homeowners suddenly can’t afford their mortgage payments. Rather, many lenders are now catching up. The foreclosures would have happened during the pandemic if moratoriums hadn’t halted the proceedings.

Bankrate, in a recent article, also provides an explanation:

“In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes. Lenders weren’t filing default notices during the height of the pandemic, pushing foreclosures to record lows in 2020. And while there has been a slight uptick in foreclosures since then, it’s nothing like it was.”

Essentially, there won't be an abrupt surge of foreclosures. Instead, the increase is partly attributed to the previously explained delayed activity and partly influenced by economic conditions.

To better illustrate the significant difference between the current situation and the housing crash, refer to the graph below. It presents foreclosure filing data for the first half of each year since 2008, demonstrating that foreclosure activity has consistently remained lower after the crash.

Despite the increase in foreclosures, it is evident that the current foreclosure activity is incomparable to the levels experienced during the housing market crash. Presently, foreclosures are significantly lower than the peak numbers recorded back then.

This can be attributed, in part, to the fact that today's buyers are more qualified and less prone to defaulting on their loans.

Bottom Line

It is crucial to contextualize the data at present. Although the housing market is witnessing a predictable rise in foreclosures, it is far from reaching the crisis levels witnessed during the housing bubble burst. Consequently, there is no reason to anticipate a crash in home prices.


Recent Blog Posts

Stay up to date on the latest real estate trends.


Unlocking Cost-Free Real Estate Marketing Strategies for Maximum Impact

Lisa Mailhot  |  May 17, 2024

Explore five innovative and cost-free real estate marketing strategies that leverage creativity and strategic thinking to enhance your brand's visibility. From network… Read more


The Rise of Tiny Homes as a Game-Changer in Modern Housing

Lisa Mailhot  |  May 16, 2024

Tiny homes are gaining popularity as affordable and eco-friendly housing options, but they come with pros and cons. Explore the tiny house movement and whether it's th… Read more


Practical Steps to Achieve Financial Prosperity

Lisa Mailhot  |  May 14, 2024

Discover effective strategies to build wealth and achieve financial freedom in our latest blog. Learn about setting financial goals, managing debt, and the importance … Read more


Inland Empire Warehouse Market Faces Oversupply, Rents Under Pressure

Lisa Mailhot  |  May 14, 2024

Explore the current challenges and opportunities in the Inland Empire warehouse market, where an oversupply bubble causing downward pressure on rents. Benefit from ind… Read more


Q1 2024 Home Price Surge: Analyzing Metro Market Trends 

Lisa Mailhot  |  May 10, 2024

Discover the latest trends in the U.S. housing market with over 90% of metro areas posting price gains in Q1 2024. Learn which regions are seeing the biggest increases… Read more


The Power of Diversity: Enhancing Real Estate Growth and Success

Lisa Mailhot  |  May 10, 2024

Discover how diversity can drive innovation, strengthen client relationships, boost team morale, and improve brand reputation in the real estate industry. Embrace the … Read more


Unraveling the Top 10 Deal Breakers in Commercial Real Estate

Lisa Mailhot  |  May 9, 2024

Navigating the complex world of commercial real estate can be a minefield, with many possible challenges that can disrupt even the most promising deals. From financing… Read more


How MLSs Are Taking the Reins in Enforcing NAR Settlement Changes

Lisa Mailhot  |  May 8, 2024

Discover the pivotal role of Multiple Listing Services (MLSs) in enforcing the latest commission rules set by the National Association of Realtors (NAR). Learn how the… Read more


Homeownership Dreams Fading for Renters in Orange County

Lisa Mailhot  |  May 7, 2024

The latest Federal Reserve Bank of New York survey has revealed a stark reality for renters in Orange County and nationwide – the prospect of owning a home is becoming… Read more

Let’s Talk

You’ve got questions and we can’t wait to answer them.