Map Shows States Where House Foreclosures Are Rising

In a housing market strained by an affordability crisis, where only 15.5 percent of homes for sale in 2023 were accessible to the typical household, the U.S. experienced an 8 percent annual increase in foreclosure filings.

Last year’s record-low affordability, as noted by a Redfin analysis, highlights a fundamental basis to data company ATTOM’s “February 2024 U.S. Foreclosure Market Report,” which recorded 32,938 properties facing foreclosure filings.

Certain states are seeing significant annual increases in completed foreclosures (REOs), indicating a potentially evolving economic landscape for homeowners across the nation.

“The annual uptick in U.S. foreclosure activity hints at shifting dynamics within the housing market,” ATTOM CEO Rob Barber said in a statement.

REOs refer to properties that have gone through the foreclosure process and are now owned by the lender, typically a bank. REOs are the final step in the repossession process and are a direct outcome of foreclosure actions.

The number of REOs can indicate how many foreclosures have been completed and how many properties are potentially entering the market as bank-owned properties.

As homeowners grapple with the ramifications of a market where elevated mortgage rates have squeezed affordability, pushing monthly payments roughly $250 higher than a year ago, according to Redfin, several states saw steep annual increases in REOs, according to ATTOM’s report.

Among them, South Carolina saw a 51 percent rise, followed closely by Missouri at 50 percent, Pennsylvania at 46 percent. To a lesser degree, Texas recorded 7 percent, and Indiana saw a marginal increase of 0.8 percent.

Those states, defying broader trends, spotlight a varied landscape of foreclosure dynamics within the U.S. Particularly, the increase in REOs indicates that while some areas may be recovering or stabilizing, others are entering a phase where more properties are being repossessed by lenders due to homeowners’ inability to meet mortgage obligations.

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Regionally, among the 224 areas with a population of at least 200,000 that ATTOM tracked, the ones that saw the greatest number of REOs in February were Chicago with 207, Philadelphia with 182, New York City at 173, Pittsburgh with 105, and Detroit recording 88.

That divergence calls for a nuanced understanding of foreclosure impacts, according to Barber. “These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices. We continue to closely monitor these trends to comprehend their complete effect on foreclosure activity.”

Foreclosure starts, a measure of early-stage distress in the housing market, saw a marked 11 percent year-over-year increase, according to ATTOM’s report, spotlighting regions grappling with heightened foreclosure risks.

Notably, Florida, California, Texas, New York, and Ohio emerged as hotspots, collectively registering thousands of new foreclosure initiations. Florida led the charge with 2,732 foreclosure starts, closely mirrored by California’s 2,730 and Texas’ 2,694, revealing a pronounced vulnerability in the populous states to the brewing foreclosure wave.

The uptick is reflective of broader economic pressures which are tightening the financial squeeze on homeowners, according to the report.

Major metropolitan areas, especially those with high populations such as New York with 1,470 foreclosure starts, Houston with 1,015, Los Angeles at 817, Chicago with 763 foreclosure starts, and Miami with 804, were among the hardest hit, indicating that the challenge is particularly acute in urban centers.

As the U.S. grapples with an uptick in foreclosure filings amid a challenging economic landscape, any path forward remains tethered to broader affordability and mortgage rate trends.

Redfin’s insights offer some hope, suggesting an easing of the factors that led to 2023 being the least affordable year on record for home buying. As mortgage rates moderate and the market adjusts, there is cautious optimism for a rebound in housing affordability this year.

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