"Wave of foreclosures" rumor

[Alex Fenske]

I'm starting to hear more chatter about this mysterious "wave of foreclosures" that was a frequent claim/projection back in 2021, which didn't happen then, and by all indications is not going to happen now.

The first graph below from the St. Louis Fed shows the delinquency rate on residential single-family mortgages, and proves there's a way to spin this data to show that delinquencies are increasing rapidly. But when I share that the low point on that visual is 1.700% of mortgages, and the high point is 1.730%, maybe the context makes a difference.

Speaking of context, consider the second picture showing the delinquency rate over the past 33 years. You'll then see that delinquency rates are:
- At their lowest point since 2006
- Historically on the low side of normal
- On an overall downward trend for the past 4 years

In fact, excluding the artificially propped-up mortgage market of 2004-2006 during which delinquency rates were slightly lower than they are today, bottoming out at 1.41% in 2005, there are fewer mortgage delinquencies today than at any time in the past 33 years.

By the way, when these scant 1.73% of homeowners become delinquent on their mortgages, they overwhelmingly have the equity to be able to sell the home at a gain if needed. Per CoreLogic, only 1.8% of all mortgaged homes are in a negative equity position, and the average homeowner across the US has $311,000 in equity.

If anyone has contradictory data, please share. Otherwise I'm (again) declaring this theory way off.