The US real estate market has gone through a period of unprecedented house price increases over the past two years. At the pace of recent months, the only period that corresponds to it is 2005-2006, just before the implosion of the real estate market and the Great Recession. When the housing bubble burst, foreclosures across the country increased. Currently, the state with the highest foreclosure rate is Illinois.
National house prices have risen almost 20% in recent months compared to the previous year’s figure. In some markets, this number has been well above this level. (This is the most expensive house for sale in your state.)
The surge in home prices has been fueled by several factors. The first of these is the record level of mortgage rates. Last year, these fell below 3% for a 30-year fixed rate mortgage. Unfortunately for buyers, mortgage rates have jumped above 5% in recent weeks. It is too early to tell if this will slow the upward trend in house prices.
Another reason for the jump is that people have decided to leave expensive coastal cities like New York and San Francisco for less expensive places. Finally, Americans have become more mobile. The COVID-19 pandemic has caused many companies to close their offices and tell their employees to work from home. (Here is 25 cities where homes are selling the fastest.)
Foreclosure rates have been exceptionally low since the housing market began to recover in 2011. Banks have become more cautious about who they offer loans to. Creditworthy buyers replaced those who took out subprime mortgages.
But after this long period of low seizures, they started to rise again. According to ATTOM, a research company and parent company of RealtyTrac, there were “a total of 78,271 U.S. properties with foreclosure records during the first quarter of 2022.” This is a 132% increase over the same period a year ago.
There are a few explanations ready for the change. Rick Sharga, Executive Vice President of Market Intelligence at ATTOM, commented: “Foreclosure activity has continued to gradually return to normal levels since the expiration of the government’s moratorium and enhanced mortgage servicing guidelines from the CFPB.” CFPB stands for Consumer Financial Protection Bureau.
To identify the state with the most foreclosures, 24/7 Wall St. reviewed the report US lockdown activity hits post-pandemic highs in first quarter of 2022 from ATTOM Data Solutions. States are ranked by foreclosure rate — the total number of properties with foreclosure filings per housing unit, from lowest to highest.
Nationally, there was a foreclosure for 1,795 dwellings. The state with the highest foreclosure rate was Illinois, where one in 791 homes was foreclosed, followed closely by New Jersey at 1 in 792. South Dakota, meanwhile, had the highest rate of lowest seizure, at 1 in 17,724 homes. units.
California, the most populous state, leads all states with 5,378 properties that entered the foreclosure process in the first quarter, out of a national total of 50,759. The total number of foreclosures in California during the quarter was also the highest of any state at 8,243, or 1 in 1,746 – the 12th highest foreclosure rate.
Click here to see the state with the most seizures