With the rising cost of living, it's natural to wonder how broader economic pressure might impact the housing market—especially when headlines mention an uptick in foreclosure filings. But despite the fear these reports may cause, today’s situation is fundamentally different from the housing crash of 2008.
When you put the data into context, it becomes clear: today’s foreclosure activity doesn’t signal a looming crisis.
How Today Compares to 2008
Recent data from ATTOM does show a slight increase in foreclosure filings. But perspective is everything. The numbers are still significantly lower than what we saw during the Great Recession—and far below what would be considered alarming.
Back in 2008, the spike in foreclosures was largely due to risky lending practices. Many buyers were approved for loans they ultimately couldn’t afford. When home prices fell, they found themselves owing more than their homes were worth, with few options but to walk away. This massive surge in distressed properties contributed to a deep housing crash.
Fast forward to today: mortgage lending standards are much stricter. Homeowners are generally more qualified, with better credit profiles and more manageable debt levels. As a result, fewer people are in financial jeopardy with their mortgages—even amid economic uncertainty.
Understanding the Recent Rise in Filings
The very low foreclosure numbers in 2020 and 2021 were influenced by government-mandated moratoriums put in place during the pandemic. These protections temporarily paused foreclosures and helped millions of homeowners avoid default during an unprecedented time.
Now that those policies have ended, the market is normalizing. It’s important not to compare today’s data to the artificially low numbers during the moratorium. Instead, look at pre-pandemic years like 2017 to 2019. When you do, you’ll see that current foreclosure activity is actually below average.
Equity Is a Major Buffer Against Foreclosures
Another key factor that sets today’s housing market apart is homeowner equity. Over the past several years, home values have appreciated significantly, allowing most homeowners to build a healthy financial cushion.
According to Rob Barber, CEO of ATTOM:
“While levels remain below historical averages, the quarterly growth suggests that some homeowners may be starting to feel the pressure of ongoing economic challenges. However, strong home equity positions in many markets continue to help buffer against a more significant spike.”
This means that even if someone is struggling financially, they’re more likely to sell their home (and possibly walk away with a profit) than to go into foreclosure. That’s a huge departure from 2008, when many homeowners owed more than their homes were worth and had no choice but to default.
Rick Sharga, Founder and CEO of CJ Patrick Company, also emphasizes this point:
“. . . a significant factor contributing to today’s comparatively low levels of foreclosure activity is that homeowners—including those in foreclosure—possess an unprecedented amount of home equity.”
Bottom Line
Foreclosure filings may be rising modestly, but they are nowhere near the crisis levels of the past. The strength of today’s lending practices, combined with high homeowner equity, continues to act as a safeguard against widespread foreclosure issues.
If you’re a homeowner navigating financial challenges, it's wise to speak with your mortgage provider early to explore your options. And if you're simply trying to make sense of the current housing market, rest assured: this isn’t 2008.
