Almost every real estate expert agrees that there’s no chance of a large-scale foreclosure crisis in the near future like we saw in 2008. This is great news for American homeowners and potential buyers.

The chief economist at First American has shared his sentiments that Americans should not expect a housing bust as we saw in the mid-2000s. He attributes the not-so-distant housing market crash to a large number of bad lending standards and practices. He also shares that the current real estate market is much different due to the amount of home equity that several homeowners across the country hold in their properties.

Data shared by the Mortgage Bankers Association also helps to back up this theory. Their most recent information shows that the overall percentage of homeowners at risk of foreclosure is decreasing significantly as time passes. There were many homeowners that sought forbearance programs during the pandemic when they were unsure of their future with their employment or unable to make home payments as the economy stood frozen. This number of homeowners in forbearance is decreasing the further we get from the year 2020.

The number of homeowners at risk for foreclosure that would cause a housing market crash is a very small percentage. This small percentage is highly unlikely to cause the real estate market to shift the way it did in 2008.

The good news is that there are alternatives available to foreclosure to avoid having to go through the process. Many of these programs include reinstatement, loan modifications, deed in lieu of foreclosure, and short sales. But before looking at any of these options it is good for a homeowner that may feel they are facing foreclosure to look into the amount of equity they hold in their property.

What is Equity?

Equity is the difference between what you owe on your mortgage balance and the fair market value of what the property is worth. Due to the huge price increases of properties all across the United States, a majority of American homeowners have a very large amount of equity in their homes. CoreLogic shares that the average equity per homeowner is almost $300,000 in the United States.

What can a large amount of equity mean to a homeowner?

If you have owned your home for at least a couple of years chances are the home value you have in equity has risen dramatically. Many homeowners don’t realize that their home's current value could be higher than the amount they still owe on their mortgage loan balance.

If you are struggling to continue to make your mortgage payments this can be very good news. It is a good idea to ask the advice of a local real estate agent about your options to help you find a solution for lowering your payments or to sell your home and pay off your loan without any financial repercussions.

For more information on selling your home in the Greater Palm Springs area please contact us anytime.