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By Rick Tobin

The summer of 2026 reminds me a lot of the summer of 2008. Back between June, July, and August 2008, the economy seemed more flat or stagnant than anything else. Some people thought the economy was still booming, while others began noticing that the economy was slowing down, especially as it related to sluggish home sales trends.

It was only when we later reached September 29, 2008 and the Dow Jones index dropped a then record -777 points that it became more clearly evident a financial implosion was upon us. To better refresh your memory about what happened primarily starting in the fall of 2008, here are details from one of my past articles:

An Imploding Financial System

In 2008, the Credit Crisis (aka Financial Crisis, Subprime Mortgage Crisis, or Global Financial Crisis) default risks became more readily apparent as these prominent financial institutions or government entities collapsed and/or were bailed out:

  • Bear Stearns: The fifth largest investment firm in the world that was heavily invested in mortgage-backed securities, collateralized debt obligations (CDOs), and other complex securities or derivatives instruments.
  • Lehman Brothers: The biggest bankruptcy ever involving over $600 billion in assets.
  • Washington Mutual (WAMU): Largest bank implosion in US history with almost $328 billion in assets.
  • FDIC (Federal Deposit Insurance Corporation): They only held $40 billion in cash reserves at the time of WAMU’s collapse, so the government had to silently bail them out to prevent bank runs.
  • Countrywide Mortgage: Once America’s #1 residential mortgage lender that almost imploded prior to being bailed out by Bank of America.
  • American International Group (AIG): They were the world’s largest insurance company and were bailed out by the US government starting with $85 billion while growing to more than $182 billion several years later.
  • Merrill Lynch: The world’s largest stock brokerage firm at the time with $2.2 trillion under management and 15,000 brokers that was taken over by Bank of America.

A derivative is a complex hybrid financial and insurance instrument which “derives” value from underlying assets or benchmarks like interest rate direction trends. Some financial analysts have stated that the total value of all global derivatives may be somewhere within the $1,500 to $3,000 trillion dollar region. If so, these derivatives dwarf all combined global assets by a significant multitude.

Because so many banks, investment firms, and insurance companies are heavily invested in one another partly by way of derivatives, this was why the Federal Reserve, the Bank of England, and other central banks around the world had to step in and bail out these multi-billion or multi-trillion dollar financial or insurance entities, directly or indirectly through others like Bank of America. If not, the global financial system would have fallen like a dominoes chain reaction.

My past article source: Simplifying and Automating Commercial Mortgages

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2008 vs. 2026 Comparisons (Good and Bad)

In California, the average 2008 home price was $318,075. In January 2008, the median home sales price in Southern California was $415,000, By year end, it fell to $278,000 as the Great Recession worsened.

In 2008, the average U.S. home sale price was around $292,600 as compared to the California average home price of $278,000. This is a rare time when California home prices were closer to the national average instead of more than double the national average like today.

The number of foreclosures increased significantly in 2008, reaching 56% of California homes sold by year-end. From peak-to-trough between 2007 and 2012, California home prices fell to an all-time state record of -41.7%.

In 2007, the median home price in California was $505,577, showing a significant decline in 2008 as foreclosures skyrocketed after peaking in price near 2006 or 2007, depending on the California region.

Almost 12% of all FHA mortgages nationwide are delinquent in 2026 (C-19 forbearances, etc.). FHA mortgages now account for 50% of all seriously-delinquent (90-day lates or longer) loans across the nation.

Median statewide home prices for California in recent years have varied between $850,000 and $930,000 (near all-time record highs). Home prices rose in 80% of metro markets nationwide, with 5% of metros recording double-digit (10%+) gains in Q2 2026, as per NAR.

California Homeowners’ $627,000 in Equity

More positive details for California homeowners include the fact that they have record amounts of home equity as well as California having the lowest percentage of negative equity or underwater homes of any state in the nation at present.

  • The typical California homeowner with a mortgage now has almost $630,000 in equity as of Q1 2026, according to Cotality.
  • Only Hawaii has more equity at $688,000.
  • In Q1 2026, California had the lowest percentage of underwater homes of any state at just 0.7%.
  • California’s average equity holdings over and above the mortgage debt is more than twice the U.S. average of $310,500, which is enough to buy a median-priced home outright in 48 states.
  • Nationally, mortgaged homeowners held $17.9 trillion in net equity in the first quarter of 2026, as per Cotality. This huge equity amount is almost five times as much as just 15 years ago.
  • For Californians, the challenge is to find a more affordable home in California if they wish to move, or to move hundreds or thousands of miles away to other states.

In the event of future price decline trends for California homes, there’s a bigger equity cushion to protect the homeowners.

Escrow Impound Shortages & Accelerating Foreclosures

The artificially suppressed and quite huge distressed and/or vacant “shadow inventory” wave is starting to accelerate into foreclosure after upwards of many years of no payments, partly tied to the start of the C-19 forbearance options as far back as October 2020.

The only item that’s usually fixed on a mortgage statement is the mortgage rate. However, property taxes, insurance, HOA fees, and maintenance costs can rapidly increase along with utilities.

“Extend and pretend” policies from lenders and mortgage loan service companies only work so long until the escrow impounds run dry as property taxes and insurance premiums skyrocket.

If and when the insurance policy lapses, this triggers an automatic mortgage default and then lenders have to file foreclosure notices to protect their interests.

As I’ve shared many times, approximately 12% of all FHA loans nationwide are currently seriously delinquent, which represents about 50% of all delinquent residential mortgages nationwide.

The fact that many of these FHA escrow impound accounts are going to zero or negative as insurance and property taxes increase is something to pay close attention to as these foreclosure defaults increase and it later becomes more clearly evident.

To learn more details about property tax and insurance trends, please read my past article here: Rising Property Taxes and Insurance: A Growing Concern for Homeowners.

Home foreclosures have surged by at least 21% this year. Recent published data shows more than 227,000 homes entering foreclosure in just the past six months. To learn more details, please watch this 11-minute video that’s entitled The Housing Warning Nobody Saw.

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Home Builders’ Financial Struggles

When new home price averages continue to remain below existing-home price averages across the nation, this is a big warning sign that the economy is facing some serious economic challenges.

In more normal economic time periods, home buyers used to pay upwards of a 15% price premium to purchase brand new homes because they wanted new appliances and other home features with the latest “bells and whistles” as well as the lengthy home warranty plans in case something later broke.

In 2025, builders are so motivated to unload their unsold home inventory that they are willing to sell the homes with major price discounts and maximum seller credits, such as buying down the mortgage rates and covering closing costs, that the new home sale price average is below the existing-home price average.

America’s largest home builders continue to slash their prices as 2026 moves onward in some of these examples:

  • Lennar reduced its average home selling price from $511,000 down to $377,000, which is almost a nearly 25% price decline, according to Reventure.
  • DR Horton also reduced their home price average from $415,000 to $366,000, a 12% home price decline.
  • DR Horton also recently reported a 20% home buyer cancellation rate as shared in this Reventure video.

New home prices fell 16% from their 2022 price peak and now are at their lowest level in five years.

The median new U.S. home price reached a price peak of $460,300 in October 2022. As of March 2026, the new home price reached $387,400. It’s a 16% price drop and the lowest price since July 2021.

For comparison purposes during the previous housing downtown in the 2007 to 2010 years, home builders slashed prices by 22% from peak to trough.

If the home builder price cut continues at the same pace, we may see total price reduction from builders that exceed the 22% home price percentage number that we saw in the previous housing bust.

In July 2026, 37% of surveyed home builders reported cutting prices that averaged about 6%. An estimated 37% of builders reported cutting prices in July alone, with average reductions around 6%, according to Reventure.

Struggling Consumers

A recent CNBC/Survey Money Quarterly Money Survey that was published in July 2026 found the following responses from polled consumers:

  • 63% of respondents were living paycheck to paycheck.
  • Upwards of 71% were “vulnerable” to major financial hardship from a single delayed income payment.
  • Of the people living paycheck to paycheck, 90% of them had less than $500 left over each month after expenses.
  • The financial burden of debt is causing 61% of survey respondents to delay major life milestones, including saving for retirement, buying homes, or marriage.
  • More than half of the consumers polled (53%) are more stressed about finances today as compared to one year ago.

The financial stress for these respondents in the financial survey are driven primarily by a lack of savings (45%), credit card debt (30%), auto insurance costs (25%) and medical bills (23%).

Declining Wage Trends

Workers’ share of the overall U.S. economy also just hit its lowest level since records began back in 1929, which was the first official year of The Great Depression (1929 – 1939), according to Unusual Whales.

Specifically, wages and salaries now make up roughly 43% of U.S. gross domestic income. The gross domestic income figure is derived from total income earned across the entire economy, including wages, corporate profits, and investment income combined.

This isn’t a sudden drop as it’s been trending downward for many decades. Back in the 1940s, U.S. worker wage income peaked near 52%. Between the 1940s and 1960s, the wage share never fell below 48%.

Many of the larger corporations are more focused on generating corporate profits and driving stock prices higher. As a result, wage trends are flat or declining and worker layoffs keep rising as AI takes over more jobs, while driving up stock values.

Potential Financial Crisis Opportunities

Whether the economy booms, busts, or stays flat, there are opportunities for savvy investors to find discounted real estate deals. With more homes for sale than buyers, it’s a much better buyer’s market for people willing to take the risk.

For many investors, they created the bulk of their overall net worth by purchasing assets low and later selling them at a much higher price.

As many of us have seen throughout our lives, the perceived strength of the economy can quickly turn from positive to negative like a scary rollercoaster turn.

The key is to anticipate that there may be some “twists and turns” up ahead so that you’re more ready to focus on the opportunities, while others are closing their eyes and fearfully screaming.

Out of chaos comes opportunity, so keep your eyes squarely focused on these daily positive and negative trends as we head into the fall of 2026 and beyond.

Rick Tobin has worked in the real estate, financial, investment, and writing fields for the past 30+ years. He’s held eight (8) different real estate, securities, and mortgage brokerage licenses to date and is a graduate of the University of Southern California.

Rick provides creative residential and commercial mortgage solutions for clients across the nation. He’s also written college textbooks and real estate licensing courses in most states for the two largest real estate publishers in the nation; the oldest real estate school in California; and the first online real estate school in California.

Please visit his website at Realloans.com for financing options, join his investment group at So-Cal Real Estate Investors, and follow his new So-Cal Real Estate TV channel for more details.

Rick Tobin
Realloans (Real Estate Loans)
https://realloans.com/
Phone or Text: (760) 485 – 2422
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For our real estate course: Learn Real Estate

Please follow our new real estate channel (watch on television, computers, and phones): So-Cal Real Estate TV

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Here are some of my articles: The Fall of 2025 and Rise of New Opportunities, The Intersection of Declining Home Sales and Creative Marketing, Are Lower Rates on the Horizon?, Weather Extremes, Homes, and Insurance Risks, The California Gold Rush Boom, and Are You Focused on Commercial Real Estate?

Please join my So-Cal Real Estate Investors group that meets at Canyon Lake Golf & Country Club, Shoreline Yacht Club in Long Beach, and online: So-Cal Real Estate Investors.