Foreclosure activity continues to increase steadily as COVID-Era policies end

Foreclosures are increasing across the United States and approaching pre-pandemic levels, according to real estate data firm ATTOM.

ATTOM’s mid-year foreclosure activity report It found that foreclosures activity has gradually increased over the past few quarters as policies related to COVID have expired.

Across the United States, there are 0.13% of all foreclosed housing units in the first half of 2023. Foreclosures were up 13% from the same period in 2022 and increased 185% from the same period two years ago.

“Similar to the first half of 2022, foreclosures activity across the United States maintained its upward trajectory, gradually approaching pre-pandemic levels in the first half of 2023,” said Rob Barber, CEO of ATTOM. statement.

The crippling trend could continue but remain below pre-recession levels

One reason for the rise in foreclosures is that housing relief measures put in place during 2020 to help homeowners struggling to pay off their mortgages ended in May.

While mortgage foreclosures in the second quarter of 2023 were below pre-2008 recessionary levels in 78% of major markets, there has been a notable uptick in the past six months. A total of 97,608 properties were submitted for foreclosure during the second quarter of 2023, well below the pre-Great Recession quarter averages of 278,912.

However, Barber said the increase in foreclosures could continue. Properties initiating foreclosures were up 15% from the first half of 2021 and 36% from the first half of 2020.

“Although overall foreclosure activity remains below historical standards, the marked uptick in foreclosure starts suggests we may continue to see a rise in foreclosure activity in the years to come,” Barber said.

Lenders foreclosed on a total of 22,672 properties in the first half of 2023, up 9% from the first half of 2022 and 133% from the first half of 2021, but down 40% from the first half of 2020.

The states with the highest number of foreclosures in the first half of 2023

So, which states saw the largest increase in foreclosure activity in the first half of the year compared to year-over-year numbers? That would be Maryland, which saw a 100% rise, followed by:

  • Oregon at 99%
  • Alaska, up 95%.
  • West Virginia, which increased by 83%
  • Arkansas, which was up 72%

The states with the highest rates of foreclosure were Illinois, which saw 0.25% of all housing units with a foreclosure filing. New Jersey, Maryland, Delaware, and Ohio also all had high foreclosure rates.

While foreclosure activity was below pre-recession averages for most metro areas, it was above average in:

  • Honolulu
  • Richmond, Virginia
  • Baltimore
  • Virginia Beach, Virginia
  • Albany, New York
  • Montgomery, Alabama

Cleveland and Atlantic City, New Jersey were tied for the largest deposit of foreclosures among the 223 metropolitan statistical areas with a population of at least 200,000 in the first half of the year, at 0.33%, followed by Fayetteville, North Carolina, and Columbia, South Carolina at 0.30% and 0.29, respectively.

California, Florida, Texas, New York and Illinois all had the highest number of foreclosures, which indicates that there may be an increase in foreclosures in those states in the coming quarters.

Top 10 states with the highest mortgage deposits

State nameTotal properties with files% of housing unitsPercentage increase from January to June 2022Percentage increase from January to June 2021
New Jersey90940.24-0.9241.88
South Carolina45110.19-1.25173.73

bottom line

While foreclosures rose in the first half of 2023, we’re still well below average foreclosures rates seen before the 2008 recession. It’s possible that we’ll see foreclosures rise in the coming quarters or even years as homeowners adjust as pandemic relief measures wind down, but there’s no reason to think the real estate market will crash anytime soon.

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Note by BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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