Even with the steady rise in foreclosures that resulted after the expiration of the COVID-19 foreclosure moratorium in September 2021, foreclosures remain below pre-pandemic levels. In 2022, foreclosures were down 34% compared to 2019, according to ATTOM Data’s Year-End 2022 U.S. Foreclosure Market Report.
It seems clear that government and mortgage industry efforts during the pandemic, coupled with a strong economy, have helped prevent millions of unnecessary foreclosures. For February 2023, foreclosures were up 18% from a year ago and down 3% between January and February.
A key difference now compared to the 2008 housing crisis is that many homeowners, and even those struggling to make payments, have had a large boost to their home values in recent years. That means they still have equity in their homes and are not underwater — when you owe more than the house is worth.
It looks like borrowers in foreclosure are leveraging the positive equity in their homes by refinancing their homes or selling for a profit. It seems likely that this is a trend that will continue in 2023.
As far as if we will see an increase in foreclosures in 2023, it seems unlikely since the job market has been steady so far, we have different loan products in comparison to the 2008 crash and equity is high. Don’t hold your breath for a crash or housing recession this year!
