The number of foreclosure starts is up 219% since January. A “start” is considered to be when the first public foreclosure notice happens. The number of properties that had foreclosure filings is up 153% from the same time period last year. 96% of major metro areas saw an annual increase in foreclosure filings, with foreclosure rates highest in Illinois, New Jersey, and Ohio. California and Florida topped the list for the number of foreclosure starts. EVP of market intelligence at ATTOM, a real estate data company, had some thoughts. “Foreclosure activity across the United States continued its slow, steady climb back to pre-pandemic levels in the first half of 2022. While overall foreclosure activity is still running significantly below historic averages, the dramatic increase in foreclosure starts suggests that we may be back to normal levels by sometime in early 2023.”
What does this quick uptick in foreclosures mean for the housing market? Foreclosures are shooting up as the various foreclosure moratoriums that kept people in their homes during the pandemic have now ended. That being said, they are shooting up from extremely low levels - noting that even after the sharp increase in foreclosure activity observed in the first half of 2022, we are still not back to 2019’s low pre-pandemic mid-year total. Much of the foreclosure activity that we are seeing today is on loans that were either already in foreclosure or were more than 120 days delinquent prior to the pandemic. Many of these loans were protected by the foreclosure moratorium put in place by the government - therefore just halting the inevitable by a couple of years. Greg McBride, chief financial analyst at Bankrate says, “Foreclosure activity is returning to normal levels after being artificially depressed by pandemic-induced payment relief programs and extended foreclosure moratoriums. In a historical context, foreclosures are still very low.” While foreclosures remain unfortunate for the owners of those homes, for shoppers who have been frustrated by the lack of homes for sale in their budget, the increase in foreclosures could bring additional options, says Hale. “But much like the increases we see in for-sale housing inventory, it’s just the first step. We would need to see many more months of these increases before home shoppers will feel like they have an abundance of homes to choose from,” says Hale.
