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  • Writer's pictureChloe Noh

Foreclosures are increasing, but is that true?

If you are interested in real estate, you must have seen the news that foreclosures have increased these days. But is that really so?

First of all, if you look at the conclusion, it is said that foreclosures have increased 115% in 2022 compared 2021. However, this is because we only looked at % compared to 2021.

In fact, the number of foreclosure filings in 2022 decreased by 34% compared to 2019.

It will be easier to understand if you look at the graph below.

“As foreclosures increase, real estate collapses and house prices plummet. This is a graph that people who irresponsibly say, "Put off buying a house" here and there, should see before sharing such irresponsible words with others. Again, the number of foreclosures increased by 115% in 2022 compared to 2021.

But 2021 is the year that took the lowest foreclosures ever. And compared to 10 years ago, when the subprime mortgage crisis was at its peak, it is about 11% of that level. It is also significantly less than before Covid.

As you know, during the COVID period, the country prevented many people from abandoning their homes through numerous government subsidies. Among those who received this government subsidy, most of them lost their jobs for a short period of time due to corona and received assistance that was suitable for their purpose; but there were also those who had to sell their homes through foreclosure even if they did not originally have corona. However, even these people were saved through government subsidy, and foreclosures sharply decreased in 2020 and 2021.

However, now that the government subsidy is over, those who would have had to foreclosure in previous years will do so now, therefore making the amount of foreclosures rise to the usual number.

However, in my opinion, it is not easy to match the usual figures now. As you all know, house prices have risen tremendously over the past 2-3 years. In other words, the wealth of those who own a home has increased tremendously. Therefore, even if homeowners whose assets have increased over the years become unable to pay their mortgages, they will generally be able to pay off their mortgages with the increased assets even if they sell them. Thus, even in the worst case, the odds of a foreclosure not being avoided by selling the house are small.

Dear clients, real estate is not a dime or two investment. At least until your 40s and 50s, it is likely to be the biggest investment in your life.

You are making such an expensive investment, but don't decide just by listening to what friends say here and there. If there is someone who says something interesting about real estate, make sure to check what the ‘quantified’ basis of the word is. Remember that among those who talk about real estate without any numerical basis, it is hard to find someone who has a really decent house.

With that being said, see you next time!

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