Most people want to leave 2020 behind after COVID-19, job losses, and an explosion of political division. Amid all of that, the housing market stayed extremely strong. Some still fear a real estate collapse being inevitable like The Great Recession of 2008.
All evidence points to this not happening due to a few key things about homeownership in recent months.
Take a look at what experts are saying, along with ample evidence of equity playing a bigger part now.
Real Reason for 2008 Home Foreclosures
As you might remember 12 years ago, far too many people lost their homes due to one simple reason. Borrowers were letting people who couldn’t really afford homes acquire mortgages. Those headlines all pointed fingers at U.S. and European investment banks that invested huge sums in subprime lending.
This led to a glut of foreclosures because homeowners did not have enough equity to withstand a drop in housing values. Not having any financial resource to tap into only put these people behind in their mortgages when coupled with high unemployment.
Harsh lessons were learned from the 2008 recession, as many people overextended and lost homes they loved. The situation going on now is nowhere near the 2008 disaster.
Many encouraging factors are happening in real estate, including data showing a far lower number of those in danger of foreclosures.
Why Some Mistakenly Think 2008 Could Happen Again
Most of the fears of a 2008 repeat come from mortgage forbearances the federal government gave to homeowners during the COVID-19 crisis. Forbearances allowed those who lost their jobs to keep their homes and forego having to pay on their mortgage for a set period of time.
Much of that is expected to end soon, bringing unfounded fears of those in forbearance having to foreclose once again. The good news is homeowners have more equity in their homes than they did 12 years ago.
According to most figures, equity is higher in most homes, and negative equity went down 6.6% over last year. Thanks to this, most homeowners won’t lose their homes once forbearance measures are taken away.
More good news comes from those keeping up their mortgage payments during forbearance, proving things are not as dire as when COVID-19 shut everything down last spring.
The Equity Factor
Most estimates show that 91% of all homeowners have at least 11% equity in their homes. It just goes to show more precautions were taken in more recent years to not let these homeowners overextend themselves.
Now those of you looking to sell your home can finally use your equity to help bring some financial gains. As we move deeper into the fall and winter months, it might be a good time to look into your equity to see if it’s higher than you thought.
Home sales remain incredibly strong and should pick up more in the spring. Whether you want to get a jump on the real estate market and list now or simply need tips on how to prepare to win in the spring, contact us today for a free consultation.
How Can You Leverage Your Equity To Move Forward?
We can help you at Path & Post using our Seller Path. Our team helps determine which is the best path for you based on your equity and where you are in your mortgage payments. You can choose various options, using: