Over the last 15 years since the financial crisis driven by mortgages issued to subprime borrowers, lending standards have changed drastically.
According to HousingWire, 12% of newly originated loans between 2004-2007 went to subprime borrowers, based on research by the New York Fed.
Since then, the borrower profile has changed drastically with 69% of the newly $1.1 trillion in loans going to individuals with credit scores over 760.
Based on the research by the New York Fed, while credit scores on newly originated loans slightly dropped during the early parts of the pandemic, they have since rebounded.
Borrowers are well-financed in their homes (often putting 20% or more down) and have gained signficant equity over the past year.
In addition, supply is still very tight with many buyers trying to purchase homes in high demand areas, such as South Orange County, so even a small amount of foreclosures would quickly be picked up.
While there is no crystal ball to the future and when the next recession will occur, the housing market still remains on very solid footing compared to the foreclosure crisis in 2007.