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April 27, 2024

Foreclosure Numbers Are Nothing Like the 2008 Crash

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If you’ve been keeping up with the news lately, you’ve probably come across some articles saying the number of foreclosures in today’s housing market is going up. And that may leave you feeling a bit worried about what’s ahead, especially if you owned a home during the housing crash in 2008.

The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.

Here’s the latest information stacked against the historical data to put your mind at ease.

The Headlines Make the Increase Sound Dramatic – But It’s Not

The increase the media is calling attention to is a little bit misleading. That’s because it’s comparing the most recent numbers to a time when foreclosures were at historic lows. And that lopsided comparison is making it sound like a much bigger deal than it actually is.

Back in 2020 and 2021, there was a moratorium and forbearance program that helped millions of homeowners avoid foreclosure during challenging times. That’s why numbers for just a few years ago were so low.

Now that the moratorium has come to an end, foreclosures are resuming and that means numbers are rising. But it’s an expected increase, not a surprise, and not a cause for alarm. Just because foreclosure filings are up doesn’t mean the housing market is in trouble.

To prove that to you, let’s expand the comparison out a bit more. Specifically, we’ll go all the way back to the housing crash in 2008 – since that’s what people worry may happen again.

The graph below uses research from ATTOM, a property data provider, to show foreclosure activity has been consistently lower since the crash in 2008:

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What the data shows is that things now aren’t anything like they were surrounding the housing crash. The bars in red are when there were over 1 million foreclosure filings a year. In 2023, there were roughly 357,000. That’s a big difference.

A recent article from Bankrate explains one of the reasons things aren’t like they were back then:

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.”

Basically, foreclosure activity is nothing like it was during the crash. That’s because most homeowners today have enough equity to keep them from going into foreclosure. And that’s a really good thing for homeowners and for the market.

The reality is, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.

 

Bottom Line

 

Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won’t lead to a crash in home prices.

 

Sept. 7, 2023

Get Ready for Smaller, More Affordable Homes

Get Ready for Smaller, More Affordable Homes




Have you been trying to buy a home, but higher mortgage rates and home prices are limiting your options? If so, here’s some good news – based on what Ali Wolf, Chief Economist at Zonda, has to say – smaller, more affordable homes are on the way:

“Buyers should expect that over the next 12 to 24 months there will be a notable increase in the number of entry-level homes available.”

In some ways, smaller homes are already here. When the pandemic hit, the meaning of home changed. People needed the space their home provided not only as a place to live, but as a place to work, go to school, exercise, and more. Those who had that space were more likely to keep it. And those that didn’t were in a position where they were trying to sell their smaller house to move up to a larger one. That meant the homes coming to the market during the pandemic were smaller than those on the market before the pandemic – and that trend continues today (see graph below):This graph also shows how the size of homes on the market changes seasonally. Larger homes tend to come on the market during the summer months when households with children who are out of school are looking to move.

That seasonality means, based on historical trends and the fact that fall is now approaching, we can expect smaller, more affordable homes to come to the market throughout the rest of the year.

That’s great news because, as Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), states, the need for these types of homes has gone up recently:

“. . . as interest rates increased in 2022, and housing affordability worsened, the demand for home size has trended lower.”

What Does This Mean for You?

The seasonal trend of smaller homes coming to the market in the later months of the year, coupled with builders bringing smaller, more affordable newly built homes to the market right now, is good news – especially if you’re finding it difficult to afford a home. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consultingsays this about a potential increase in the availability of smaller homes:

“It’s not solving the affordability crisis, but it is creating opportunities for people to be able to afford an entry-level home in an area.”

Bottom Line

If a smaller, more affordable home sounds appealing to you, good news – they’re coming. To keep up with what’s available in our area, let’s connect.

Feb. 10, 2023

Why Today’s Housing Market Isn’t Headed for a Crash

Why Today’s Housing Market Isn’t Headed for a Crash

Why Today’s Housing Market Isn’t Headed for a Crash | MyKCM

67% of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there’s good news. Current data shows today’s market is nothing like it was before the housing crash in 2008.

Back Then, Mortgage Standards Were Less Strict

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance an existing one.

As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.

The graph below uses data from the Mortgage Bankers Association (MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.

Foreclosure Volume Has Declined a Lot Since the Crash

Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM to show the difference between last time and now:

So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don’t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Riskexplains the impact a large increase in foreclosures had on home prices back then – and how that’s unlikely this time.

“The bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”

The Supply of Homes for Sale Today Is More Limited

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.

Bottom Line

If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.

Jan. 2, 2023

What Are Your Goals in the Housing Market This Year?

What Are Your Goals in the Housing Market This Year?

What Are Your Goals in the Housing Market This Year? | MyKCM

If buying or selling a home is part of your dreams for 2023, it’s essential for you to understand today’s housing market, define your goals, and work with industry experts to bring your homeownership vision for the new year into focus.

In the last year, high inflation had a big impact on the economy, the housing market, and likely on your wallet too. That’s why it’s critical to have a clear understanding of not just the market today, but also what you want out of it when you buy or sell a home. Danielle Hale, Chief Economist at realtor.comexplains:

The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, so that you can stay in your home long enough that buying is a sound financial decision.

Here are a few questions you can start thinking through as you fine tune your goals for 2023.

1. What’s Motivating You?

You’re dreaming about making a move for a reason – what is it? No matter what’s happening in the market, there are still many compelling reasons to buy a home today. Your needs may have changed in a way your current house can’t address, or you could be ready to step into homeownership for the first time and have a space that’s truly your own. Use what’s motivating you as a guidepost in partnership with an expert advisor to help make sure your move will give you a lasting sense of accomplishment.

2. What Does Your Next Home Look Like?

You know you want to move, but how would you describe your dream home? The available supply of homes for sale has grown, and that could mean more options to choose from when you buy. Just be sure to keep your budget in mind and work with a trusted real estate professional to balance your wants and needs. The better you understand what’s essential and where you can be flexible, the easier it can be to find the home that’s right for you.

3. How Ready Are You To Buy?

Getting clear on your budget and savings is essential before you get too far into the process. Working with a local agent and a lender early is the best way to make sure you’re in a good position to buy. This could include planning how much to save for a down payment, getting pre-approved for a home loan, and assessing your current home equity if your move involves selling your existing house.

A Professional Will Guide You Through Every Step of the Process

Buying or selling a home is a big process that takes expertise to navigate. If that feels a bit overwhelming, you aren’t alone. According to a recent Harris Poll survey, one in five respondents see a lack of information or knowledge about the homebuying process as a barrier from owning a home. Don’t let uncertainty hold you back from your goals this year. A trusted expert can bridge that gap and give you the best advice and information about today’s market.

Bottom Line

Let’s connect to plan how your dreams for 2023 can become a reality.

Feb. 9, 2022

No Matter What the Groundhog Says, You Should Sell Before the Spring

Buyers are looking for homes right now, and with today’s record-low inventory, the chance of your house getting noticed is high. Let's connect today so you get all the benefits that come with listing your house before spring.

 

Jan. 15, 2022

Home Equity Is a Seed That Can Grow Your Wealth

Oct. 22, 2021

How Supply and Demand Can Tip the Pricing Scales in Todays Market

 

Oct. 22, 2021

Your Home Equity Is Growing

Your Home Equity Is Growing

Your Home Equity Is Growing [INFOGRAPHIC] | MyKCM

Some Highlights

  • If you’re a homeowner, today’s rising equity is great news. On average, homeowners have gained $51,500 in equity since this time last year.
  • Whether it’s funding an education, fueling your next move, or starting a business, your home equity is a great tool you can use to power your dreams.
  • Ready to sell? Let’s connect to talk about how you can take advantage of your rising equity to reach your goals.
Jan. 5, 2021

Expert Forecast on the 2021 Housing Market

Oct. 15, 2020

Why Selling Your House Before Next Spring Is Key