Why Today’s Foreclosure Numbers in Los Angeles and Beverly Hills, CA Are Nothing Like 2008
Why Today's Foreclosure Numbers in Los Angeles and Beverly Hills, CA Are Nothing Like 2008 | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert
You’ve likely seen headlines about the number of foreclosures climbing in today’s housing market. That may leave you with a few questions, especially if you’re thinking about buying a house in Los Angeles or Beverly Hills, CA. Understanding what they really mean is mission-critical if you want to know the truth about what’s happening today.
According to a recent report from ATTOM, a property data provider, foreclosure filings are up 6% compared to the previous quarter and 22% since one year ago. As media headlines call attention to this increase, reporting on just the number could actually generate worry and may even make you think twice about buying a home for fear that prices could crash. The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.
In Los Angeles and Beverly Hills, CA, the real estate market has been thriving for the last few years. Although the COVID-19 pandemic caused a temporary slowdown, the market has bounced back and continues to be strong. According to a report by the California Association of Realtors, Los Angeles and Beverly Hills, CA have experienced a steady increase in median home prices since 2014. In fact, the median home price in Los Angeles is $883,000, while Beverly Hills' is $4.2 million.
As the government’s moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market in Los Angeles or Beverly Hills, CA is in trouble. As Clare Trapasso, Executive News Editor at Realtor.com, says:
“There’s no reason to panic, at least not yet. Foreclosure filings began ticking up . . . after the federal foreclosure moratorium ended. The moratorium was enacted in the early days of COVID-19, when millions of Americans lost their jobs, to prevent a tsunami of homeowners losing their properties. So some of these proceedings would have taken place during the pandemic but got delayed due to the moratorium. This is a bit of a catch-up.” Basically, there’s not a sudden flood of foreclosures coming in Los Angeles or Beverly Hills, CA. Instead, some of the increase is due to the delayed activity explained above while more is from economic conditions. As Rob Barber, CEO of ATTOM, explains:
“This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges. However, with many homeowners still having significant home equity, that may help in keeping increased levels of foreclosure activity at bay.” To further paint the picture of just how different the situation is now compared to the housing crash, take a look at the graph below. It shows foreclosure activity has been lower since the crash by looking at properties with a foreclosure filing going all the way back to 2005.
While foreclosures are climbing in Los Angeles and Beverly Hills, CA, it’s clear foreclosure activity now is nothing like it was during the housing crisis. In addition to all of the factors mentioned above, that’s also largely because buyers today are more qualified and less likely to default on their loans.
Today, foreclosures in Los Angeles and Beverly Hills, CA are far below the record-high number that was reported when the housing market crashed. In fact, according to Zillow, Los Angeles has one of the lowest foreclosure rates in the nation.
Bottom Line Right now, putting the data into context is more important than ever for those looking to buy a home in Los Angeles or Beverly Hills, CA. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won