More Americans are in danger of losing their homes as the number of foreclosure filings continues to surge.
In the first half of this year, foreclosure starts shot up 15%—nearing pre-COVID-19 levels—according to real estate data provider ATTOM’s Midyear 2023 US Foreclosure Market Report. Nearly 186,000 properties across the country received foreclosure filings during that period.
ATTOM collected data from more than 3,000 counties where property owners received default and list pending notices, scheduled auctions, and bank repossessions.
“Although overall foreclosure activity remains below historical norms, the notable surge in foreclosure starts indicates that we may continue to see a rise in foreclosure activity in the coming years,” ATTOM CEO Rob Barber said in a statement.
There’s no need for folks who remember the foreclosure crisis that came to define the Great Recession to panic.
Many of these foreclosures would have occurred during the pandemic, but were put off due to federal, state, and local foreclosure moratoriums designed to keep people in their homes after scores of workers were laid off as COVID-19 set in. Only about 1 in every 752 properties had a foreclosure filing in the first half of the year.
However, homeowners unable to pay their mortgages are having their properties repossessed. Lenders did foreclosure on 22,672 properties from January through June. That’s up 9% from last year, but still 40% below the same period in 2020.
This isn’t the Great Recession 2.0
Real estate experts have stressed that this isn’t a repeat of the Great Recession. It’s not that scores of homeowners suddenly can’t afford their mortgage payments. Rather, many lenders are now catching up. The foreclosures would have happened during the pandemic if the moratorium had not halted the proceedings.
This explains why the average length of the foreclosure process hit an all-time high of 1,212 days, which translates into more than three years.
Another key difference is the many homeowners who lose their properties today often aren’t walking away empty-handed. Home prices have gone up so much over the past few years, that many struggling property owners who can’t afford their mortgages are choosing to sell their homes rather than undergo a foreclosure, which can damage their credit.
Many are pocketing a profit from those sales, which can help them with a fresh start.
In which states are foreclosures rising the most?
Foreclosures rose the most in Maryland, where they doubled compared with a year ago. They were up 99% in Oregon; 95% in Alaska; 83% in West Virginia; and 72% in Arkansas.
However, the state with the highest foreclosure rate was Illinois. The state had the highest percentage of homes with a foreclosure filing, at 0.25%. Illinois was followed by New Jersey, at 0.24%; Maryland, at 0.23%; Delaware, at 0.23%; and Ohio, at 0.20%.
Rounding out the top 10 were South Carolina, Florida, Nevada, Indiana, and Connecticut.
The metros with the highest foreclosure rates
Cleveland residents were the most likely to have a foreclosure filing. The metropolitan area, which includes the main city and surrounding communities, has the highest foreclosure rate in the nation, at 0.33%. (The analysis looked only at the 223 metros with at least 200,000 residents.)
Next up was Atlantic City, NJ, at 0.33%; Fayetteville, NC, at 0.30%; Columbia, SC, at 0.29%; and Lakeland, FL, at 0.29%. The rest of the top 10 were Chicago; Jacksonville, FL; Florence, SC; Philadelphia; and Elkhart, IN.