{"id":164975,"date":"2024-01-19T12:33:29","date_gmt":"2024-01-19T19:33:29","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=164975"},"modified":"2024-02-02T02:49:55","modified_gmt":"2024-02-02T09:49:55","slug":"foreclosure-activity-increased-in-2023","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/foreclosure-activity-increased-in-2023","title":{"rendered":"Foreclosure Activity Increased in 2023\u2014But What Do the Numbers Mean for Investors?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC5067675659\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">ATTOM\u2019s Year-End 2023 U.S. Foreclosure Market Report shows that foreclosure activity increased last year from 2022 levels, but is this a cause for concern for investors?&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.attomdata.com\/news\/market-trends\/foreclosures\/attom-2023-year-end-u-s-foreclosure-market-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">ATTOM report<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;shows that&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/2006-09-01-how-to-find-foreclosure-and-pre-foreclosure-listings\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">foreclosure<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;filings, which include default notices, auctions, and repossessions, stood at 357,062, up 10% from 2022 and 136% from 2021. These figures look much less alarming, however, when set in the context of pre-pandemic foreclosure levels. Foreclosure activity in 2023 was still 28% lower than it had been in 2019 and down a massive 88% from its peak in financial crisis-ravaged 2010.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">At its 2010 worst, U.S. foreclosures represented 2.23% of all U.S. housing units. At the end of 2023, this percentage stood at a mere 0.26%, a slight increase from 0.23% in 2022.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">ATTOM CEO Rob Barber commented in a press release that the 2023 rise in foreclosure activity should be viewed as \u2018\u2018a market correction rather than a cause for alarm. It signals a return to more traditional patterns after years of volatility.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s worth remembering that there was a foreclosure moratorium in place on federally-backed mortgage loans between March 2020 and July 31, 2021. This explains why foreclosure activity hit an all-time low of 0.11% of housing units in 2021. Inevitably, once the moratorium ended, foreclosure filings began climbing up.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Do the Numbers Mean?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Fortunately, what we\u2019re&nbsp;<\/span><em><span data-preserver-spaces=\"true\">not&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">seeing is a nationwide wave of foreclosure activity that could signal systemic problems with the housing market and wider economy. Barber is confident that \u2018\u2018while foreclosure activity may fluctuate, it&#8217;s unlikely to approach the highs seen in the last decade. Instead, we foresee a market that is more reflective of broader economic trends, with foreclosure filings becoming a more predictable aspect of the housing landscape.\u2019\u2019<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Real estate investors on the ground appear to support the view that the rise in foreclosure filings at the current level isn\u2019t worrisome. Yancy Forsythe, owner at&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/missourivalleyhomes.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Missouri Valley Homes<\/span><\/a><span data-preserver-spaces=\"true\">, told BiggerPockets that the rise in foreclosure filings should be interpreted as \u2018\u2018part of a market correction rather than a worrying trend.\u2019\u2019 In addition, while Forsythe is seeing \u2018\u2018a similar trend of rising foreclosures in the Missouri real estate market,\u2019\u2019 it isn\u2019t \u2018\u2018alarming.\u2019\u2019<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Still, a rise in foreclosures means that more people are unable to pay their&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgages<\/span><\/a><span data-preserver-spaces=\"true\">. Investors should familiarize themselves with regional foreclosure trends. It\u2019s on the regional level that the disparities in housing markets are beginning to show themselves.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to the ATTOM data, five states in 2023 saw foreclosure levels actually increase from pre-pandemic levels:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Indiana (+73%)<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Idaho (+70%)<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Michigan (+15%)<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Nevada (+10%)<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Minnesota (+9%)&nbsp;<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">However, these weren\u2019t the states with the greatest overall foreclosure numbers. Those were California (29,180 foreclosure starts), Texas (28,533), and Florida (27,427). To put these numbers into context, these are all densely populated states (California has a population of 39 million), whereas Indiana is relatively sparsely populated (population of 6.8 million), and the rise in foreclosure activity here is dramatic.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Investors need to take note of these numbers because a sharp rise in foreclosure activity means that, on the one hand, local homeowners are really struggling with affordability, and, on the other, they are having a hard time selling. Rachel Blakeman, director of Purdue Fort Wayne\u2019s&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.pfw.edu\/centers\/cri\/reports\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Community Research Institute<\/span><\/a><span data-preserver-spaces=\"true\">, told the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fwmediacollaborative.com\/foreclosures-on-the-rise-in-indiana-and-across-the-us\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Fort Wayne Media Collaborative<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;that in a thriving housing market like Northeast Indiana, \u2018\u2018if you can sense that you\u2019re starting to get behind on your mortgage and you need to get out of the house, you can probably sell the house relatively quickly. Depending on how long you\u2019ve owned the house, you\u2019re probably not underwater.\u2019\u2019<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/state\/Indiana\/housing-market\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Redfin data<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;for November 2023 shows that while home prices were continuing to grow in Indiana (2.2% year over year), the number of home sales declined by 9.34%. A stagnant housing market, combined with ongoing&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/afford-invest-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">unaffordability<\/span><\/a><span data-preserver-spaces=\"true\">, is bad news for local populations, and it\u2019s not great news for investors.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Bottom Line<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">While foreclosure investing in hot markets can be lucrative, it is much riskier in areas where selling or renting out a property may present challenges. That said, high foreclosure numbers in large states are not to be taken as a sign of an unhealthy housing market.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Take Florida, for instance. Yes, it is the state with the highest number of foreclosures, according to the ATTOM report. Yet even a rookie investor will know that Florida continues to be an attractive location for investing in real estate.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Florida is experiencing a population boom, with nine of its largest metros&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.floridarealtors.org\/news-media\/news-articles\/2023\/10\/2024-housing-market-outlook-better-year-ahead\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">expected to grow 10% or more in the next decade<\/span><\/a><span data-preserver-spaces=\"true\">. Demand for Florida homes will continue to outstrip supply. What this means is that even homeowners who find themselves in a foreclosure or pre-foreclosure situation will have no trouble finding a buyer. If someone can\u2019t afford a home in Florida, someone else will buy it.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As the Indiana example demonstrates, there will be housing markets that display different patterns within the same state. Investors should take note of this and only invest in an area with high foreclosures&nbsp;<\/span><em><span data-preserver-spaces=\"true\">if<\/span><\/em><span data-preserver-spaces=\"true\">&nbsp;it is also experiencing a population influx and has a healthy labor market. Before investing in an area, always investigate it for&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/markets-most-and-least-vulnerable-to-housing-declines\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">signs of a possible housing market decline<\/span><\/a><span data-preserver-spaces=\"true\">: high foreclosure rates, high local unemployment, and high numbers of underwater mortgages.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_989f6fccdc53acd255823b24d47dd305\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_25f521718409c4f3bde83b1b4358fcd9\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_c242dc6f43794b4afa4bff3d0c69d925 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/foreclosure-activity-increased-in-2023&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/foreclosure-activity-increased-in-2023&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Foreclosure numbers rose steadily throughout 2023 and increased year-over-year from 2022. Now, as we enter 2024, will those numbers hold up, and what should you make of them?<\/p>\n","protected":false},"author":613618,"featured_media":164977,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119,6],"tags":[],"class_list":["post-164975","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily","category-foreclosure-investing"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/164975","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=164975"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/164975\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/164977"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=164975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=164975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=164975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}