The economy and the real estate market have both shifted, and that’s made some people nervous about the future of real estate. Because we saw so many home sales in 2020 and 2021 during what was a good time for the economy and the real estate market, there are worries that a flood of foreclosures is on the horizon. But are thousands of foreclosures likely in 2023?
Short answer: it’s not likely.
The last time we saw widespread, mass foreclosures were during the infamous years of 2007 and 2008. During that time, predatory lending practices made it so many people got into mortgages they simply couldn’t afford. Then, when the Recession hit and people lost their jobs, they were forced to foreclose on their homes because they couldn’t keep up with the mortgage anymore.
That’s not the case now. Revised lending rules have made it so lenders can’t put buyers into unaffordable and unsustainable mortgages. The mortgages taken on in the last few years were subject to those revised practices, so homeowners should be in a good position to continue paying their mortgages, even in a turbulent economy. In addition, low interest rates during the past couple of years make paying that mortgage even easier.
During the mass foreclosures of 2007 and 2008, we were also in the Great Recession. Because of this, buyers were scarce. Even if homeowners wanted to sell their homes to avoid foreclosures, no one was there to buy them. Now, there are many qualified buyers just waiting for the perfect home to hit the market. So, if a homeowner finds that they can’t afford their home now, they can simply list it and sell it–likely for a profit given that most markets have increased in the meantime.
At the end of the day, most homeowners are in good shape right now due to revised lending practices and more qualified buyers. We are not likely to see a flood of foreclosures in 2023, which is great news. Experts are predicting that our real estate market will return to pre-pandemic norms with a steady stream of both buyers and sellers and no crazy mass foreclosures.
Want to talk more about our real estate market and how to make smart real estate decisions in the current climate? Get in touch with the SIMS BLUE Team.