Why Today’s Foreclosure Numbers Won’t Trigger a Crash: Insights for Los Angeles and Beverly Hills Real Estate

Why Today’s Foreclosure Numbers Won’t Trigger a Crash: Insights for Los Angeles and Beverly Hills Real Estate | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert

With rising costs affecting everything from groceries to gas, many people are concerned about how these expenses could impact the real estate market in Los Angeles, Beverly Hills, and beyond. Some fear that high prices and tighter budgets could lead to an increase in foreclosures, causing a potential housing crash similar to 2008. However, today’s market is fundamentally different, and the latest foreclosure data indicates no such crash is on the horizon.

How Today’s Market Differs from 2008

To calm any fears, it’s important to examine the data. According to research from property data provider ATTOM, the number of homeowners starting the foreclosure process is dramatically lower than during the housing crash of 2008. Back then, a flood of foreclosures overwhelmed the market, driving prices down and sparking economic chaos. Today, the foreclosure rate remains stable, and recent reports even show a slight decline in filings. For those worried about a repeat of 2008, it’s crucial to remember that the conditions today are vastly different.

In 2020 and 2021, foreclosure numbers dipped even further due to government moratoriums aimed at protecting homeowners during the pandemic. Now that the moratoriums have ended, foreclosure filings have ticked up slightly, but they're still well below pre-crisis levels. The key factor keeping foreclosure rates low today is the amount of equity homeowners have in their properties—especially in high-demand areas like Los Angeles and Beverly Hills.

Equity: The Game-Changer for Homeowners in Los Angeles and Beverly Hills

One of the biggest differences between today’s housing market and the crash of 2008 is the amount of equity homeowners now have. Back in 2008, many people owed more on their mortgages than their homes were worth, leading to waves of foreclosures. Today, thanks to years of rapid home price appreciation, most homeowners in Los Angeles and Beverly Hills have substantial equity in their homes. According to Bankrate:

"In the years after the housing crash, millions of foreclosures flooded the housing market, depressing prices. That’s not the case now. Most homeowners have a comfortable equity cushion in their homes."

This equity acts as a financial safety net. If a homeowner falls on hard times and can no longer afford their mortgage payments, they often have the option to sell their home, pay off their mortgage, and even walk away with some money. This prevents foreclosures from spiking and helps keep the housing market stable, even as costs rise.

In the high-end markets of Beverly Hills and Los Angeles, where property values are significantly higher than the national average, equity is particularly robust. Homeowners in these areas are far less likely to face foreclosure due to the substantial value their properties hold. This is good news for anyone worried about the stability of the luxury real estate market.

What This Means for the Future of Real Estate in Los Angeles and Beverly Hills

Although the cost of living continues to rise, it doesn’t mean the Los Angeles or Beverly Hills housing markets are headed for a foreclosure crisis. In fact, the equity cushion built into today’s homes is providing a strong layer of protection for homeowners. The demand for luxury real estate remains strong, and the supply of distressed properties is limited, further insulating the market from a major downturn.

For buyers and sellers in the LA and Beverly Hills areas, this presents an excellent opportunity. Sellers can feel confident that their property holds significant value, while buyers can take comfort in the stability of the market. If you're considering buying or selling a home in these coveted neighborhoods, working with a real estate expert who understands these trends is critical.

Bottom Line: No Foreclosure Crisis Ahead for Los Angeles and Beverly Hills

While everyday costs are rising, the housing market in Los Angeles and Beverly Hills remains stable, thanks to the substantial equity homeowners have built. This equity is helping to prevent a surge in foreclosures, unlike what happened during the 2008 crash. So, if you're thinking about entering the real estate market, whether as a buyer or a seller, now is a great time to explore your options with a trusted local expert.

Let's connect today to discuss how you can make the most of the current market conditions in Los Angeles and Beverly Hills!

Call Christophe Choo at (310) 777-6342 to tour your future home "HERE" or click "HERE" to estimate your home value