When foreclosure rates decreased in October and November 2023, ATTOM CEO Rob Barber warned that it was part of the “cyclical nature of the market” rather than a long-term trend. Unfortunately, Barber has been proven right this year as foreclosures rise throughout the United States. In February 2024, lenders started the foreclosure process on 22,757 properties throughout the nation, a 4% increase from January 2024 and an 11% increase from the same point in time last year. At present, one in every 4,279 housing units has a foreclosure filing; however, this statistic isn’t representative of the United States as a whole. Some cities and states have far higher foreclosure starts and filings than others. Likewise, the REO rate varies wildly depending on geographic location.
South Carolina comes in first place as the state with the highest foreclosure rate, as one in every 2,248 homes are in foreclosure in the Palmetto State. The rate is even higher in the state’s capital, Columbia, where one in every 1,478 housing units are in foreclosure. Spartanburg has a foreclosure rate of one in every 1,742 housing units while Florence has a rate of one in every 1,809 units. There were over 1,000 foreclosures in South Carolina in February 2024 alone, which is alarmingly high considering the fact that South Carolina is only the twenty-third most populous state in the U.S. Florida, in contrast, saw 3,768 foreclosures in February 2024, putting it in first place for the state with the highest number of foreclosures. However, it is the third most populous state in America, with more than four times as many residents as South Carolina. Even so, the Sunshine State’s residential real estate market is still in trouble with a foreclosure rate that stands at one in every 2,632 homes. Lakeland, Florida, has a foreclosure rate of one in every 1,600 housing units while Orlando, FL has one foreclosure filing for every 1,938 residential units. Miami’s market is also facing turbulence with a foreclosure rate of one in every 2,392 housing units and 777 foreclosure starts in February 2024 alone.
Other states with a high foreclosure rate are Delaware, Ohio, Connecticut and Illinois. Delaware has one foreclosure filing for every 2,428 homes. Ohio had a foreclosure rate of one in every 2,828 homes, while Cleveland had a foreclosure rate of one in every 2,176 housing units. Connecticut has a foreclosure rate of one in every 2,884 housing units while Illinois’ foreclosure rate is currently at one in every 2,951 units. Chicago in particular has a great deal of foreclosure-related activity, coming in fourth place for the most foreclosure starts in February 2024 and the highest number of repossessions as lenders took possession of over 200 residences. In contrast, repossessions are down over 50% in Georgia. The Peach State had fewer than 1,000 foreclosures in February and the foreclosure rate stands at an impressive one in every 4,476 households. North Carolina’s REO rate is 34% lower year-on-year and the state only has one foreclosure for every 6,172 housing units.
While there are many reasons why homeowners find themselves unable to keep up with mortgage payments, it appears that current economic conditions are a leading factor in rising foreclosure rates. Inflation is up over 3% from last year. The 401(K) hardship withdrawal rate is at a record high. The end of the student loan repayment moratorium is also putting pressure on homeowners throughout the nation. Bankruptcies surged by 18% in 2023 and are expected to keep rising this year. At the same time, almost 85,000 people lost their jobs in February 2024, a 9% increase from the previous year and a 3% increase from January 2024. While only time will tell when inflation will finally cool and the economy will fully recover, what can be said for certain is that the odds are foreclosures will continue to rise this year as homeowners struggle to juggle mortgage payments along with multiple other expenses.
Have questions?
If you or someone you know has questions about the current foreclosure climate, we’d be happy to answer your questions:
(818) 591-9237