Talk of a housing market crash has been with us since the onset of the pandemic. Rather than crash, the housing market went on a historic run.

As mortgage rates rose rapidly last year, talk of a crash grew louder once again. Rising mortgage rates would cause buyer demand to evaporate causing home prices to come crashing down.

While there has been a correction, and home prices have come down, how much depends on where you live, we can’t exactly call it a crash.

Now foreclosures are back in the news as the just released 1st quarter foreclosure numbers show filings increased by 22%. Will increasing foreclosures cause the housing market to crash?

Watch the following video, or continue reading below, to find out;

Foreclosures Are on the Rise

ATTOM Data, which tracks foreclosure activity across the country, recently noted that despite the government’s efforts to reduce rates during the pandemic, we are seeing an upward trend in foreclosure activity;

Not surprisingly, headlines about increasing foreclosures soon followed. Here are just a few that I have seen in the past week;

Some Perspective is Needed

Foreclosures are part of every real estate market, good or bad. Sometimes a house will get foreclosed on because the owners pass away without an heir, sometimes a property gets inherited and the heirs are out of state and can’t afford the property, people get sick, a home falls into disrepair, etc.

Considering the last housing market crash was dominated by foreclosures, any increase in foreclosure activity makes prospective buyers nervous.

Although foreclosure activity in Q1 2023 was up compared to the last couple of years, how did it compare to years past?

The following graph shows the number of foreclosure filings per year back to 2005 with the dark red bars indicating over one million filings;

Taking a closer look at just the last 6 years, you can see there were over 1 million fewer foreclosure filings between 2020 and 2022 than there were between 2017 and 2019.

Granted, there were foreclosure moratoriums in place during the pandemic that kept the numbers lower than they likely would have been, but when you look at the numbers from Q1 2023 we are currently trending to have fewer total foreclosure filings than we had in 2019;

Local Foreclosure Filings

Our housing market here in North Texas remains strong overall and we are not seeing very much foreclosure activity at this time.

There have been 207 foreclosure filings in Collin County YTD
In Denton County, there have been 372 foreclosure filings YTD

It’s important to point out that not all foreclosure filings end with an actual foreclosure.

Some homeowners that get behind on their payments are able to work out a repayment plan with the bank, and in other situations, especially when you consider how much equity the majority of homeowners have gained over the past few years when there are no other options, the property can be listed and sold, enabling all debts to be paid off.

Here are the total number of local foreclosure sales, per the MLS, in 2019;

60 foreclosure sales in Collin County
44 foreclosure sales in Denton County

While any increase in foreclosure activity is concerning, there is still nothing in the data currently to suggest we are going to see a foreclosure wave like we did during the previous housing market crash;

Bottom Line

Here in Frisco and the surrounding areas, there are currently not enough homes for sale to satisfy demand. We are seeing multiple offers on many properties with many starting to sell above the list price (not like the crazy bidding wars of last year though😀).

If you have questions about the local market and want to know if this is a good time for you to consider buying or selling a home, schedule a call with me, and let’s talk about it.

To stay up to date on the latest market trends sign-up for my weekly market report. It’s available for any city or zip code in the area, just use the search bar at the top of the Frisco Market Report.