Every few months the news cycle grabs onto a dramatic housing headline , and the most recent one claims that “foreclosures are rising sharply.”
Technically, some foreclosure categories have increased year-over-year, but the real question is: compared to what? When you look at the actual data, along with today’s lending standards, homeowner equity levels, and ownership tenure, the idea of a new foreclosure wave simply doesn’t hold up.
Homeowner Equity in California Is at an All Time High
Take a look at the first chart: California homeowners have built massive equity cushions over the last decade.
- Over 84% of California homeowners have 40%+ equity.
- Only a tiny portion have minimal or negative equity.
- Rising values over 12+ years and limited turnover have pushed equity to record levels.
Equity is the #1 buffer against foreclosures.
When someone runs into financial hardship, the ability to sell or refinance avoids distress. Today’s owners are not stuck like they were in 2008–2011, when millions were underwater.
Sellers Are Staying Longer Than Ever and With Ultra Low Rates
Another factor tamping down foreclosure risk: people aren’t moving.
The second chart shows the average homeowner tenure has jumped to roughly 15 years more than double what it was in the early 2000s. Why are owners holding on?
- Ultra low mortgage rates they don’t want to give up
- Low property tax bases under Prop 13
- Capital gains exposure on highly appreciated properties (Hopefully Uncle Sam will be increasing the limits soon)
- Limited replacement home affordability
- Many choose to remodel instead of selling
Owners with low payments and large equity positions are simply not the type of borrowers who end up in foreclosure.
Foreclosure Activity Today Is a Fraction of the Post Great Recession Levels
Take the long term perspective shown in the ATTOM chart:
- At the peak (2010), the U.S. saw 1.65 million foreclosure filings in six months.
- In recent years, filings fell to historic lows, with some years under 100,000.
- Even if filings “rise” 20–40% from last year’s levels, they’re rising off of the lowest base in modern history.
So yes, the percentage increase sounds dramatic, but the actual numbers are still extremely low by historical standards. It’s like saying traffic doubled… on a highway that had almost no cars on it yesterday.
Mortgage Underwriting Since 2010 Has Been Some of the Tightest Ever
Another key point the media rarely mentions:
- QM rules
- ATR (Ability-to-Repay) standards
- Income verification
- Conservative debt-to-income limits
- Strong oversight on lending products
The loans written over the last decade are far healthier than the subprime and no-doc loans that dominated the 2004–2007 market.
Combine strong underwriting with homeowners’ record equity levels, and the chance of a systemic foreclosure spike is low.
So Why Are Headlines Saying Foreclosures Are “Jumping”?
Because a 20–40% increase sounds huge. But remember:
- If filings go from 10,000 to 14,000, that’s a 40% jump.
- But compared to 1.6 million filings in 2010? It’s noise… not a crisis.
Foreclosure data is normalizing after years of pandemic moratoriums, lender forbearance, and artificially low distress levels. What we’re seeing today is simply:
A return from “unusually low” to “very low.”
It’s not the start of a meltdown.
Bottom Line
As someone who’s been originating mortgages and analyzing housing data for decades, I can tell you:
We do not have the ingredients for a foreclosure crisis.
What we do have is:
- Record homeowner equity
- Extremely strong loan quality
- Long-term ownership tenure
- Low turnover
- A supply constrained market
- Distress numbers still near historic lows
Where There Can Be Issues
HOAs! I’ve blogged about them several times, the financial stress some are in and insurance problems. Owners tied into distressed condo complexes may see foreclosures escalate.
Very recent buyers that used low downpayment loans (like FHA), may not have a financial buffer if they hit a wall.
Any uptick you hear about is relative to the lowest baseline in modern history, not a sign of widespread distress.
If you have questions about equity positions, financing options, or the state of the market here in Southern California, reach out anytime. Always happy to give you the straight, data driven perspective.
If you are in the Los Angeles area, and have any questions or real estate sales or financing needs, feel free to contact me
Ron Henderson GRI, SRES, SFR, RECS, CIAS, CREN, GREEN
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – Southland Regional Association of Realtors (2025)
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
DRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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