Two analysts debate whether the housing market will crash in late 2022. They examine foreclosure rates and homeowner equity, concluding the market stays strong even as the economy weakens.
Many headlines are.
Predicting a housing market collapse, but in order for that to happen, there needs to be a wave of foreclosures where a lot of people give up their houses and there's too many houses and not enough people trying to buy them. Well, the premise behind those headlines is that foreclosures are up this year compared to last year.
But if we look back to last.
Year, there was.
A moratorium.
You couldn't foreclose even if you wanted to. So foreclosures were virtually zero. So now that that's been lifted, sure, they've opened up a little bit. There has been some foreclosures just like any normal year. You can look back through history, but what the headlines miss is we're down 60% in foreclosures compared to a normal year. If we throw last year out, which was a anomaly because there was a ban against foreclosures, and we're down 90% versus a bad year of foreclosures in the past. So housing market is still super strong. And the reason being is people have record equity in their houses. They haven't given up the crazy last few years that they've gained equity in their houses.
The average homeowner.
Has 58% equity in their house.
So even if they fall on hard.
Times, they can pull money from the house, they can get a heloc, they can get a second mortgage, they could do a cash out refund by pull money out of their house to stay strong and stay afloat. You compare that 58% to 18% equity back in 2008. People were super tight. They had nowhere to turn, they had a foreclose. Today there's unlimited options with the amount of equity. And that's why the housing market's strong.
We've already went through the worst of it.
It only gets better from here. So the housing market survived yet another downturn in the economy.
