The Hidden Forbearance Program Myth Costing Santa Clara Sellers
Timothy Alston | Broker
Aegis Luxury Real Estate · DRE# 01328224
Published
August 08, 2022
Sports, tech, and community
The forbearance program did not cause a wave of foreclosures. It prevented one. When pandemic-era job losses threatened millions of homeowners, this relief option allowed nearly five million borrowers to pause payments, work out modified loan terms, and stay in their homes. That is the core reason the housing market today looks nothing like the crash of 2008.
You know how sometimes you hear a rumor long enough that it starts to sound like fact? A lot of people in Santa Clara have been quietly holding off on real estate decisions because they were waiting for foreclosures to flood the market and push prices down. But here is the part most people have not stopped to think about yet: that wave never came. And there are very specific reasons why.
So before you keep waiting, it might be worth asking yourself: what am I actually waiting for, and what is that wait costing me?
What Did the Forbearance Program Actually Do for the Housing Market?
When the pandemic hit in 2020, foreclosure fears were immediate and loud. Economists drew comparisons to the 2008 housing crisis. But something different happened this time. The forbearance program gave homeowners a structured path forward instead of a cliff edge.
Nearly five million homeowners used forbearance at its peak. And the outcomes tell a story worth understanding. According to Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association, most borrowers exiting forbearance moved into a loan modification, payment deferral, or a combination of both workout options. Four out of every five homeowners in forbearance either paid in full or exited with a clear plan. They stayed in their homes.
Does that match what you have been hearing? Or have you been picturing something closer to 2008?
Why the Forbearance Program Changed Everything About Foreclosure Risk
Here is what made this moment different from the last housing crash. It was not just one thing. It was several factors working together at the same time.
First, lending standards are dramatically tighter now than they were before 2008. Borrowers who got loans in the years leading up to the last crash often could not truly afford them. Today’s borrowers are far more qualified. Delinquency rates reflect that. Foreclosure filings, even after the moratorium lifted, remained a fraction of what the housing market saw during the crisis years.
Second, home equity changed the calculus entirely. Homeowners sitting on significant equity had an option that 2008 borrowers simply did not have: the ability to sell, walk away with cash, and avoid foreclosure altogether. When you owe more than your home is worth, you are trapped. When you have built real equity, you have choices.
Thomas LaSalvia, Chief Economist at Moody’s Analytics, put it plainly: there are people with home ownership who, even in a downturn, would still likely be able to pay their mortgage and would not have to hand over the keys. The distressed sales that defined 2008 were not going to repeat at that scale.
Can you see how that changes the picture for someone trying to read where the Santa Clara market is actually headed?
What This Means If You Are Watching the Market in Santa Clara
If you have been waiting for a foreclosure flood to create buying opportunities in Santa Clara homes for sale, that strategy is built on a premise the data does not support. The forbearance program, combined with strong equity positions and tighter lending standards, fundamentally shifted how this housing market handles economic stress.
Homes in Santa Clara are not sitting in a pre-crash inventory buildup. Supply remains constrained. Sellers who needed to make a move largely had the equity to do it cleanly, without distress pricing. That undersupply dynamic is still shaping what buyers encounter today.
What would it mean for your timeline if the market correction you were waiting for is not coming in the form you expected? Would you make a different decision right now?
What Happens If You Keep Waiting?
This is the question worth sitting with honestly. If you keep operating on the assumption that a wave of distressed properties will open up, and that wave does not arrive, where does that leave you in three to five years?
Rent does not build equity. Every month that passes is a month of someone else’s mortgage being paid down. And in a market like Santa Clara real estate, where inventory consistently runs tight, sitting on the sidelines is not a neutral position. It is a choice with a cost attached to it.
What is that cost, specifically, for your situation?
The Forbearance Program Is a Reference Point, Not a Warning Sign
The housing market today is not fragile in the way 2008 was fragile. The forbearance program worked because the underlying structure of borrower qualification and home equity was fundamentally different. That context matters when you are trying to make a clear-headed decision about whether to buy, sell, or hold in the current market.
The Santa Clara market has seen consistent demand from buyers and limited inventory from sellers throughout this cycle. Average days on market for homes in Santa Clara remains well below national benchmarks, reflecting a buyer pool that has not disappeared.
Does that give you a clearer picture of where things actually stand?
If so, the next step is a straightforward conversation about your specific situation, not a pitch, not a presentation. Just an honest look at the numbers and what they mean for where you want to go. Timothy Alston, licensed Broker at Aegis Luxury Real Estate, is available to walk through exactly that with you.
Reach out whenever you are ready: (408) 207-4593. The conversation is yours to start whenever it makes sense for you.
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Broker · DRE# 01328224
Aegis Luxury Real Estate
Harvard Business School Online, Certified Master Negotiation
23+ Years Silicon Valley Real Estate Experience
Retired Military Veteran
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Aegis Luxury Real Estate · Timothy Alston, Broker, DRE# 01328224 · 10080 N. Wolfe Rd Ste SW3-200, Cupertino CA 95014 · (408) 207-4593
Last updated: July 11, 2026 | Data reflects July 2026 MLS statistics
