Foreclosures are coming, but the sky is not falling.
The number of foreclosure filings during the third quarter jumped 68% from the comparable 2020 period and 34% from the previous quarter, per ATTOM Data Solutions. While those are whopping percentage increases, housing market experts don’t see another foreclosure crisis on the horizon for a number of reasons.
Unemployment remains high, but companies have ramped up hiring—in fact, many are struggling to find workers. That bodes well for workers looking for better-paying jobs to help them afford their monthly mortgage payments.
And the number of foreclosure filings is still lower than it was prior to the pandemic. Although there were twice as many properties with foreclosure filings in September 2021 as in September 2020, that’s still almost 70% fewer than September 2019.
“There are hundreds of thousands of borrowers scheduled to exit forbearance in the next two months,” Rick Sharga, executive vice president at RealtyTrac, a company owned by ATTOM, said in a statement. “It’s possible that we might see a higher percentage of those borrowers default on their loans. [However], we’re still far below historically normal numbers.”
Also, not everyone who has a foreclosure filing (defined as a default notice, scheduled auction, or bank repossession) is going to lose their homes in an ugly or financially devastating way. With home prices at record highs, homeowners are more likely to be able to sell their home if they can no longer keep up with payments—sometimes for a profit, which can help to cushion the blow.
And unlike during the Great Recession, there are more buyers than homes available.