As government backed foreclosure moratoriums edge closer to expiration, the number of borrowers who’re still under some kind of bailout program is declining fast. But the future is not as bleak as some may have feared for those who’re still in trouble.

Data from Black Knight shows there were 1.618 million American borrowers still in some kind of forbearance program as of July 2021, down 5% from the month before and far below the peak of around five million back in May 2020. When the COVID-19 pandemic first kicked off, borrowers were granted up to 18 months of forbearance from the date the entered the program, hence many are now expiring. In September, another 400,000 borrowers in forbearance will expire.

It may sound like a large number, but the prospect of a foreclosure crisis is looking increasingly unlikely thanks to a sharp rise in home prices that has seen homeowner equity grow significantly since one year ago.

Just 3.1% of all outstanding mortgages in the U.S. are in forbearance, amounting to an unpaid balance of $313 billion, CNBC reported. But Black Knight’s data reveals 98% of those borrowers have at least 10% equity in their homes. What that means is, in a worst case scenario the vast majority of troubled borrowers could sell their homes if need be and still walk away with a profit.

Ben Graboske, president of data and analytics for Black Knight, told CNBC the strong equity position of homeowners will limit the volume of distressed inflow into the real estate market. It will also “provide strong incentive for homeowners to return to making mortgage payments, even if needing to be reduced through modification,” he said.

Further data from CoreLogic shows the amount of “tappable equity”, which is the cash homeowners with mortgages could actually take out of their homes while retaining a minimum of 20% equity, jumped by a collective $1 trillion in the second quarter. That’s due to fast-growing home prices, which have pushed the total amount of home equity in the U.S. up from $6 million in February 2020 to more than $9 trillion now.

CoreLogic reported home prices in July rose more than 18% from the same month a year before. Some states saw even bigger gains – Idaho home prices were up 33%, while Arizona homes gained 28%.

“Home price appreciation continues to escalate as millennials entering their prime homebuying years, renters looking to escape skyrocketing rents and deep pocketed investors drive demand,” CoreLogic President and Chief Executive Frank Martell said.

For all the optimism though, data from Attom Data Solutions that shows foreclosure starts, which is when a bank kicks off the process of foreclosing on a home, increased by 60% from one year ago, and by 27% from July. However those increases are from a very low base, as foreclosure activity was all but quelled one year ago due to government moratoriums. Looking back to August 2019, foreclosure starts then were three times higher.

Rick Sharga, executive vice president of RealtyTrac, which lists foreclosed homes for sale, said the increase in foreclosure activity was predicted. “This doesn’t mean we should expect to see a flood of distressed properties coming to market,” he added.

Rather, Sharga told CNBC he believes foreclosure activity will tick up slowly over the next three months as loans that were in default prior to pandemic-related moratoriums being introduced see that protection expire. He explained there is a backlog of foreclosure filings that were due, but not processed due to the pandemic.

“It’s likely foreclosures will remain below normal levels at least until the end of the year,” he told CNBC.