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More homeowners are facing foreclosure.
The number of properties that had received a foreclosure filing was up 8% year over year to nearly 33,000 properties in February, according to a recent report from real estate data firm ATTOM. It amounts to about one in every 4,300 homes facing a foreclosure filing in this month.
(Foreclosure filings include default notices, scheduled auctions, and bank repossessions.)
“The annual uptick in U.S. foreclosure activity hints at shifting dynamics within the housing market,” ATTOM CEO Rob Barber said in a statement. “These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices.”
The good news for homeowners is lenders repossessed fewer homes in February. While about 3,400 homes were repossessed, that was down 11% year over year and down 14% from the previous month.
In addition, the number of completed foreclosures fell annually in 28 states.
“We continue to closely monitor these [housing market] trends to comprehend their complete effect on foreclosure activity,” Barber said in the statement.
The reason foreclosure filings are rising
The rise in foreclosure filings isn’t a sign that the housing market is hurtling toward another crash. It’s more about playing catch up.
During the pandemic, foreclosure moratoriums were put in place to protect homeowners. Many Americans quite suddenly lost their jobs in early 2020 during the lockdowns, so lawmakers enacted moratoriums to protect these people from losing their homes, too.
The federal moratorium expired in mid 2021. However, many states extended restrictions, most of which have since also ended. So foreclosure filings are rising, compared to very low levels in the previous years.
Another reason not to worry about another wave of foreclosures is that the market is fundamentally different than it was during the Great Recession. There are now more buyers than there are homes for sale—the opposite of what happened after the housing bubble burst.
Lenders are also much stricter about who can get a mortgage today, so only the most qualified borrowers receive loans. And the riskiest loans that got homeowners into the most trouble no longer exist, for the most part.
Plus, homeowners who can no longer make their monthly mortgage payments can often sell their home—some for a profit—rather than go through the foreclosure process.
States with the highest foreclosure rates
South Carolina not only had the highest foreclosure rate in the country, the Palmetto State also experienced the largest increase in repossessed homes. Lenders repossessed 51% more homes in February in the state than they did at the same time last year.
(Only states with at least 50 completed foreclosures were included.)
1. South Carolina
A foreclosed home in Columbia, SC
Realtor.com
Number of homes with a foreclosure filing in February: One in every 2,248 homes
2. Delaware
Number of homes with a foreclosure filing in February: One in every 2,428 homes
3. Florida
Realtor.com
Number of homes with a foreclosure filing in February: One in every 2,632 homes
4. Ohio
Number of homes with a foreclosure filing in February: One in every 2,828 homes
5. Connecticut
Number of homes with a foreclosure filing in February: One in every 2,884 homes
The metros with the highest foreclosure rates
Unsurprisingly, South Carolina had four of the top five metropolitan areas with the highest foreclosure rates in the country. (ATTOM only included metros with at least 200,000 residents. Metros include the main city and surrounding towns and smaller urban areas.)
The state’s capital of Columbia, home to the University of South Carolina, had the most elevated rate in the nation.
1. Columbia, SC
Number of homes with a foreclosure filing in February: One in every 1,478 homes
2. Lakeland, FL
A foreclosed home in Lakeland, FL
Realtor.com
Number of homes with a foreclosure filing in February: One in every 1,600 homes
3. Spartanburg, SC
Number of homes with a foreclosure filing in February: One in every 1,742 homes
4. Merced, CA
A foreclosed home in Merced, CA
Realtor.com
Number of homes with a foreclosure filing in February: One in every 1,794 homes
5. Florence, SC
Number of homes with a foreclosure filing in February: One in every 1,809 homes
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