One Key Sign We’re Not Headed for a Wave of Foreclosures in Parker Colorado

Every once in a while you’ll see a headline saying foreclosures are rising. And when people hear that, their mind immediately goes back to 2008 and the housing crash.

That reaction is understandable. But when you look at the actual data, the situation today is very different.

Yes, foreclosure filings have ticked up a bit. But they’re still nowhere near crisis levels. Not even close.

Let’s look at one of the most important indicators: serious mortgage delinquencies — homeowners who are 90 days or more behind on their mortgage payments.

According to data from the New York Fed, serious delinquencies have increased slightly. But they’re still extremely low by historical standards.

Right now, about 1% of mortgages are seriously delinquent. That’s 1 out of every 100 homeowners.

During the housing crash, that number climbed to around 9% — or roughly 1 out of every 11 homeowners.

That’s a massive difference.

And remember, not every delinquency becomes a foreclosure. Many homeowners who fall behind work out repayment plans with their lenders. Banks generally prefer that solution too, because they don’t want a flood of foreclosures on their books.

That’s why the number of homes actually entering foreclosure is even smaller.

According to ATTOM, only about 0.3% of homes are currently in the foreclosure process. And even among those, many will never go all the way through to a completed foreclosure.

That’s not a wave.

At most, it’s a ripple.

Why Aren’t Foreclosures Higher?

You might be wondering: if people are feeling financial pressure, why aren’t we seeing more foreclosures?

The answer is actually pretty simple.

When households feel squeezed financially, the mortgage payment is usually the last bill they stop paying. People will fall behind on other debts first because the last thing they want to risk losing is their home.

Data from the New York Fed shows serious delinquencies have increased more on credit cards and auto loans than they have on mortgages.

In other words, people may struggle with other debt, but they fight hard to keep their homes current.

Home Equity Is a Huge Safety Net

Another big difference today compared to 2008 is home equity.

Over the past several years, home values have risen significantly. That means many homeowners now have substantial equity in their homes.

And equity creates options.

If a homeowner starts to experience financial difficulty, they can often sell the home, pay off the mortgage, and still walk away with money in their pocket. That’s something many homeowners simply didn’t have during the last housing crash, when large numbers of people owed more than their homes were worth.

Today, for most homeowners, that’s not the case.

The Bottom Line

Yes, foreclosure filings have increased slightly.

But they are still extremely low by historical standards. Homeowners today in Parker, Colorado have far more equity, more options, and far stronger financial positions than they did leading up to the housing crash.

So if headlines about foreclosures make you uneasy, it helps to step back and look at the bigger picture.

The data is clear.

This isn’t 2008 all over again.