Recently Arizona has seen more unemployment claims than ever before over the past several weeks, concern is spreading widely. Some good news, however, shows that 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.Looking at what unemployment means for home ownership, and understanding the significant equity Arizona homeowners hold today, are important parts of seeing the picture clearly when sorting through this uncertainty in 2020.
One of the biggest concerns right now is whether this historic unemployment rate will create a new surge of foreclosures in the 2020 market. It’s a very real concern. Despite the staggering number of claims, there are actually many reasons why we probably won’t see a significant number of foreclosures like we did during the housing crash twelve years ago. 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 considerably 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 above)
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 Arizona homeowners have today positions them to be in a much better place than they were in 2008. The worst case scenario for some people may be selling and getting equity out. Depending on the situation.
Before homeowners panic, they may want to talk to a financial advisor and a real estate agent. There may be much better options than walking away.