As a country we have gone through some tough weeks while we are learning how to deal with the COVID-19 pandemic. We have seen more unemployment claims than ever before and fear is spreading widely among many of us.People are wondering how this will end and what will happen to us.
It is not all bleak however. More than 4 million initial unemployment filers have likely already found a new job, especially as industries such as health care, food and grocery stores, retail, delivery, and more increase their employment opportunities. As the country reopens, thee new employment opportunities and rehirings will increase and the unemployment numbers will decrease. Still, the numbers are shockingly high.
One of the biggest questions right now is whether this historic unemployment rate will initiate a new surge of foreclosures in the market. Despite the staggering number of claims, there are actually many reasons why we won’t see a significant number of foreclosures like we did during the last recession twelve years ago. That recession was created by the significant structural issues in the housing market.
The amount of equity homeowners have today is a leading differentiator in the current market. Today, according to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity. That number is very different than it was in 2008 when the housing bubble burst. The last recession was painful, and when prices dipped, many found themselves owing more on their mortgage than what their homes were worth. Homeowners simply walked away at that point. Now, 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. Those homes are not at risk for foreclosure (see graph below):
In addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a significant amount that homeowners won’t be stepping away from, even in today’s economy (see chart below):
In essence, the amount of equity homeowners have today positions them to be in a much better place than they were in 2008.
Bottom Line
The fear and uncertainty we feel right now are very real, and recovery is not likely to be easy. We can, however, see strength in our current market through homeowner equity that has not been there in the past. That is a bright spark to help us make it through.
We don't have to live in panic and we don't have to paint our future as chaos and misery. If you would like specific information about the value of your home in this market, and the equity that you have in your home just give us a call at 240-401-5577 or email us at lise@lisehowe.com or click here to start the process of home valuation.
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