Because of the events of 2020, there has been a lot of buzz about a downturn in the housing market or even another “foreclosure crisis”. Is this likely to happen? The answer is: not likely.
There are several factors that make real estate in 2020 different from real estate in 2008.
For starters, homeowners have a record amount of equity in their home. If someone is facing foreclosure in today’s market, chances are they can sell their home, take their cash and walk away with a profit. In many cases, homeowners have over 50% equity in their home.
Another major difference is that mortgage companies have greatly increased the qualifications that need to be met in order to get approval for a loan. Mortgages were much easier to come by pre-2008, but banks learned their lesson the hard way and are now more cautious about who they choose to lend to. As a real estate professional, one of my biggest headaches is helping my clients jump through the lending hoops, but every time I reach for the aspirin, I remember, it is those hoops that are protecting us all. You can find a more in depth explanation of how mortgage lending has changed here but, keep in mind, this is pre-COVID.
Possibly the biggest difference between our current situation and 2008, however, are the forbearance programs that are currently in effect. These programs give struggling homeowners a grace period in which to pay back their loan. There are pros and cons here, but one thing is sure, it can relieve a whole lot of stress off of a struggling homeowner and allow them time to figure out what works best for them.
All of this coupled with low inventory makes another foreclosure crisis not likely in the near future.
If you have any questions or real estate needs, feel free to give us a call at 541-312-9449. We’d love to help!