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With everything feeling more expensive these days, it’s natural to worry about how rising costs might impact the housing market. Many people are concerned that high prices and tighter budgets could cause more homeowners to fall behind on their mortgage payments, leading to a wave of foreclosures.
But before you start worrying about a housing market crash, here’s a look at what’s really happening. And the good news is: the latest foreclosure data shows there’s no wave on the horizon.
Let’s ease those fears by looking at the bigger picture. The graph below uses research from ATTOM, a property data provider, to show that the number of homeowners starting the foreclosure process is nowhere near what we saw coming out of 2008. Back then, there was a big spike in how many foreclosures were happening. Today, the number is much lower – it’s even dropped some in the latest report. There’s a big difference between what’s happening now, and what happened when the housing market crashed (see graph below):
Just in case you’re wondering why the number of foreclosure filings has ticked up slightly since 2020 and 2021, here’s what you need to know. During those years, there was a moratorium (shown in white) designed to help millions of homeowners avoid foreclosure in challenging times. That’s why the numbers for just a few years ago were so incredibly low. If you look further back, it’s clear overall foreclosure filings are down significantly.
And if you’re wondering: how are there fewer foreclosures today, even when the cost of living has gotten so pricey? Here’s your answer. One of the main reasons is that homeowners today have a lot more equity built up in their homes than they did back in 2008. As an article from Bankrate explains:
“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.”
This equity acts like a safety net and is allowing many homeowners to avoid going into foreclosure if they’re facing financial hardships. Even if someone is struggling to make their monthly payments, they may be able to sell their home and avoid foreclosure altogether. This is a far cry from the conditions during the crash when homeowners owed more on their mortgages than their homes were worth.
It’s true that today’s higher cost of living across the board is a challenge for many people right now. But this doesn’t mean we’re heading for a surge in foreclosures.
The equity cushion that people have is helping to keep foreclosure filings low. Today’s homeowners have more options to avoid going into foreclosure.
Yes, everyday costs for gas and food have gotten more expensive—but that doesn’t mean the housing market is on the brink of another foreclosure crisis. Data shows the market is far from a foreclosure wave. Homeowners today are in a much stronger financial position than they were during the 2008 crash, thanks to significant equity.
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Even though there are more homes available for sale than there were at this time last year, there are still more buyers than there are houses to choose from. So, know that if you’ve got moving on your mind, your house can really stand out.
There are several key reasons why there aren’t enough homes to go around and understanding them will help you see why the market is working in your favor if you’re ready to make a move.
1. Underproduction of Homes: For years, the industry hasn’t built enough homes to keep up with demand. As Zillow explains:
“In 2022, 1.4 million homes were built — at the time, the best year for home construction since the early stages of the Great Recession. However, the number of U.S. families increased by 1.8 million that year, meaning the country did not even build enough to make a place for the new families, let alone begin chipping away at the deficit that has hampered housing affordability for more than a decade.”
2. Rising Costs: Building materials, labor shortages, and supply chain disruptions caused by the pandemic have all made it harder and more expensive to build homes. This can either limit or stop new home construction in some areas.
3. Regional Imbalances: Some markets are more affected by the shortage of homes than others. Popular and more desirable areas have more people moving in faster than new homes can be built. The number of new building permits issued doesn’t always keep pace with job growth in these regions, and that leads to even tighter markets and higher prices.
According to estimates from Real Estate News, the U.S. is facing a housing shortfall of roughly 3.3 million homes, based on an average of several expert insights (see graph below):
This shows there’s a significant number of homes that need to be built just to meet current demand from buyers. But what about future demand?
According to John Burns Research and Consulting (JBREC), over the next 10 years, the U.S. will need about 18 million new homes to meet projected demand, including homes for new households, second homes, and replacements for aging or unusable homes.
So, even though more homes are on the market compared to last year, there still aren’t enough of them to go around. This is where you can really win if you’re ready to sell your house.
If you’re thinking about selling, the shortage of homes for sale means your house is likely to get some serious attention from buyers. It’ll take years to climb out of this inventory deficit, and the market is still very tight. So, when buyers are competing for relatively few homes like they are right now, that creates more interest in the houses that are on the market, putting upward pressure on prices and ultimately working in your favor.
And since every market is different, it’s important to work with a real estate agent who understands local trends. They can help you price your house right and create a strategy to attract the right buyers.
While there are more homes for sale than there were at this time last year, there’s still a shortage overall. And this puts you in the driver’s seat as a seller. Let’s connect so you have someone who can help you take advantage of today’s market.
Every seller wants to get their house sold quickly, for as much money as they can, with as few headaches as possible. And chances are, you’re no different.
But did you know one of the biggest things that could jeopardize your success is the asking price for your home? Pricing your house correctly is one of the most crucial steps in the selling process.
So, how do you know if you’re missing the mark? Here are four signs your high asking price might be turning potential buyers away—and why leaning on your real estate agent is the best way to course correct.
One of the most obvious signs your house may be overpriced is a lack of showings. If it’s been on the market for several weeks and only a few buyers have come to see it—or worse, you haven’t gotten any offers—it could be a clear indication the price isn’t matching up with what buyers expect. Because buyers who have been looking for a while can easily spot (and write off) a home that seems overpriced.
Your real estate agent will coach you through this, so lean on their experience for what you may want to try to bring more buyers in, including considering a price cut.
And if after the showings you do have, comments from the potential buyers aren’t great, you may need to course correct. Feedback from showings is an important part of understanding how buyers see your house. If they consistently say it’s overpriced compared to other homes they’ve seen, it’s time to reconsider your pricing strategy.
Your agent will gather and analyze this feedback for you, so you can look at how your house stacks up in the market. They can also suggest specific improvements or staging changes to better justify your asking price, or recommend one that aligns with today’s buyer expectations. As the National Association of Realtors (NAR) explains:
“Based on all the data gathered, agents may make adjustments to the initial price recommendation. This could involve adjusting for market conditions, property uniqueness, or other factors that may impact the property’s value.”
And that lack of interest is ultimately going to lead to it sitting on the market without any serious bites. The longer it lingers, the more likely it is to raise red flags for buyers, who may wonder if something is wrong with it. Especially in today’s market with growing inventory, a long listing period means your house is stale – and that makes it even harder to sell.
Your real estate agent will be able to give you perspective on how quickly other homes in your area are selling and walk you through what’s working for other sellers. That way you can decide together if there’s something you want to do differently. As a Bankrate article says:
“Check with your agent about the average number of days homes spend on the market in your area. If your listing has been up significantly longer than average, that may be a sign to reduce the price.”
And here’s the last one to watch out for. If similar homes in your area are selling faster than yours, it’s a clear sign that something is off. This could be due to things like a lack of upgrades, outdated features, or a less desirable location. Or, it may be priced too high.
Your agent will keep you up to date on your competition and what changes, if any, you need to make your home more competitive. They’ll offer advice on small updates that could increase your home’s appeal or how to adjust your strategy to reflect the reality of the market today.
Pricing a home correctly is both an art and a science. It requires a deep understanding of the market and buyer psychology. And when the price isn’t drawing in buyers, there’s no better resource than your agent on what you may want to do next.
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Now that you’ve decided to buy a home and are ready to make it happen, it’s a good idea to plan ahead for the costs that are a typical part of the homebuying process. And while your down payment is probably the number one expense on your mind, don’t forget about closing costs. Here’s what you need to know.
Simply put, your closing costs are the additional fees and payments you have to make at closing. And while they’ll vary based on the price of the home and how it’s being financed, every buyer has these, so they shouldn’t be a surprise. It’s just that some people forget to budget for them. According to Freddie Mac, this part of the homebuying process typically includes:
Some of these are one-time expenses that are baked into your closing costs. Others, like homeowners’ insurance, are initial installment payments for ongoing responsibilities you’ll have once you take possession of the home.
The same Freddie Mac article goes on to say:
“Closing costs vary greatly depending on your location and the price of your home. Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.”
With that in mind, here’s how you can get an idea of what you’ll need to budget. Let’s say you find a home you want to purchase at today’s median price of $422,600. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $8,452 and $21,130.
But keep in mind, if you’re in the market for a home above or below this price range, your numbers will be higher or lower.
If you’re wondering if there’s any way to inch that down a little bit, NerdWallet lists a few things that could help:
“Your real estate professional should be able to steer you toward applicable programs, and the U.S. Department of Housing and Urban Development (HUD) maintains a helpful resource for finding homebuying assistance programs in every state.”
Planning for the fees and payments you’ll need to cover when you’re closing on your home is important – and it doesn’t have to be a big surprise. With the right experts on your side, you can make sure you’re prepared. Let’s connect so you have someone you can go to for more tips and advice. Let’s Talk Soon!
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