The number of foreclosure initiations (when the first public foreclosure notice is issued) is up 219% year-to-date, according to the Mid-2022 U.S. Foreclosure Market Report from real estate data analytics firm ATTOM Data Solutions. Additionally, the number of properties filed for foreclosure, including foreclosures initiated, increased 153% from the same period last year.
Foreclosure filings are increasing annually in 96% of major metropolitan areas, with the highest foreclosure rates in Illinois, New Jersey, and Ohio. California led the way in terms of foreclosure initiations, followed by Florida, Tennessee, Illinois and Ohio.
Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, said: “While overall foreclosure activity remains well below historical averages, the dramatic increase in foreclosure initiations suggests a return to normal levels is likely by early 2023.” he says Mr Sharga. (See the lowest mortgage rates you can get here.)
What does this increase in foreclosures mean for the housing market?
Realtor.com chief economist Daniel Hale explains that foreclosures have surged as various moratoriums on foreclosures that have kept people at home during the pandemic’s worst economic turmoil have ended. That said, they are skyrocketing from very low levels, she added.
“Similar to the recent sharp shift in housing inventory observed in the number of homes for sale, if the market is tilting in one direction to a very extreme degree, if the trend reverses in the other direction, there will be a significant percentage increase. In many ways, what we’re seeing is just a return to something akin to what was once normal,” says Hale.
In fact, “it’s important to note that many of the foreclosures we see today are on loans that have already been foreclosed or are 120 days or more past due, pre-pandemic,” Sharga said. In fact, many of these loans were protected by moratoriums on foreclosures implemented by the government during the pandemic, which helped delay the inevitable by several years. Bankrate Chief His Financial His Analyst Greg McBride said: In a historical context, foreclosures are still very low. ”
While these foreclosure numbers sound dramatic, NerdWallet’s home and mortgage expert Holden Lewis said they weren’t enough to impact the housing market and the economy at large. “Even in a healthy housing market there are foreclosures, and this pace is nothing to worry about,” says Lewis.
What does this mean for buyers?
Foreclosures remain unfortunate for these homeowners, but increased foreclosures could provide additional options for shoppers frustrated by the lack of budget homes for sale. “But much like the increase in home inventory for sale, this is only the first step. It has to last for months,” Hale says. (See the lowest mortgage rates you can get here.)
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