Foreclosure Rates are Rising, but Not Evenly. See Which States Have the Highest and Lowest Rates

As inflation and rising interest rates increase foreclosure rates throughout the United States, it’s easy to lose sight of the fact that the housing market isn’t the same nationwide. Borrowers (and lenders) in some states are doing better than others, thanks to factors such as an increase in new jobs, migration patterns, low cost of living, and/or availability of construction workers and materials. Following is an overview of states with the highest and lowest foreclosure rates.

California has the highest foreclosure rate in the nation, with nearly 3,500 homes going into foreclosure in July 2022 alone. Florida, which comes in second place, saw 3,001 foreclosures in July. This isn’t surprising as these states are, respectively, the first and third most populous in the United States. However, pundits point out that investors should keep a close eye on the Sunshine State as the rate of foreclosures there is growing exponentially, even though the rising rate can be attributed in part to previous reporting delays and changes in foreclosure rules were keeping statistics low in the first half of 2022. California, on the other hand, has the thirteenth highest foreclosure rate in the nation in terms of foreclosures to available housing units. Illinois comes in third place with 2,325 homes foreclosed on in July 2022; furthermore, it has the second-highest foreclosure rate in the nation with one out of every 2,334 homes in foreclosure. However, the foreclosure rate is decreasing in the Windy State, as one out of every 791 housing units was foreclosed on in Illinois in the first quarter of 2022.

The states with the fewest foreclosures are South Dakota and Vermont. Foreclosures in each of these states were in the single digits; however, there are plenty of other states with only two-digit foreclosure rates. North Dakota had only 18 foreclosures, Montana had 33, Alaska had 38, and Rhode Island had 43. West Virginia had 51 foreclosures in July while Idaho had 67. However, because these states have a low population, it is important to assess not just the number of foreclosures but also the ratio of foreclosures to total housing units. In South Dakota, for instance, the foreclosure rate is one out of every 55,700 homes; however, in Montana, the rate is about one out of every 15,600 homes, and in Alaska, it’s an alarming one out of every 8,356 homes.

Unfortunately, with rising interest rates and runaway inflation, the real estate market is set for a shock as foreclosure rates rise across the nation while aspiring homeowners put off their dreams of homeownership until mortgage rates fall. Lenders may find it challenging to sell homes in some states as even some investors may want to wait until the dust settles to find the best possible deals. Even so, staying abreast of real estate foreclosure statistics nationwide can help lenders make smart decisions when dealing with delinquent borrowers and foreclosed properties.