Foreclosure and bankruptcy are on the rise these days, as you may have come across in economic news if you're following it. This can be a sensitive issue for those planning to buy or sell a home. I'd like to share my thoughts on this, as there's an article from Keeping Current Matters that touches on this topic.
First, it's important to understand the content of the article. The main point of the article is that "foreclosure and bankruptcy are increasing," not that they are necessarily high. If you've been observing self-employed individuals around you, you may have seen people struggling before the COVID pandemic, and then during the pandemic, they improved their lives with government assistance. During that period, there was also help available for mortgage loans from banks or the government. Therefore, from 2020 until recently, the number of foreclosures and bankruptcies was actually much lower than usual. Now, after the end of such assistance, these numbers are returning to pre-pandemic levels, which means that they are increasing from the lower levels seen during the pandemic.
Let's take a closer look at the graphs.
First, let's consider Foreclosure.
Even recently, there were clients who heard stories about an increase in foreclosures and expected a flood of properties on the market similar to what happened in 2008. However, as you can see from the graph, the current level of foreclosures still hasn't reached the levels seen at the end of 2005 and falls far short of the numbers from 2015 to 2020.
Now, let's look at Bankruptcy.
It's a similar story. As you can see, in 2021 and 2022, bankruptcies were significantly lower than in previous years, and now they are returning to a more typical level. Especially, if you look at the leftmost part of the graph, you'll notice that even in 2019, which was unaffected by COVID, there were nearly 800,000 bankruptcy filings. The data for 2023 only goes up until the end of June, and even if it were to double, it would still be at a level around 830,000 cases.
To reiterate, yes, foreclosures and bankruptcies are on the rise. However, what's happening is a return to pre-pandemic levels after a few years of government support, not a housing market collapse with a massive increase in numbers. Keep this in mind. If you have any questions about today's post, feel free to reach out anytime. I'll be back with more informative content in the next post.
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