Foreclosure Trends Are Shifting — What Does That Mean for Investors?

Question

I was looking at some recent foreclosure data and noticed something interesting:
While foreclosure filings overall are still below their peak from the 2008 crisis, certain markets are seeing noticeable spikes year-over-year.

For example:

• Some mid-size cities in the Midwest have foreclosure rates up 25–30% compared to last year.
• Coastal markets with high property taxes are also showing an increase, even though property values remain strong.
• Rural areas, surprisingly, are seeing some of the fastest jumps — possibly due to limited job markets and fewer refinancing options.

Some mid-size cities in the Midwest have foreclosure rates up 25–30% compared to last year.

Coastal markets with high property taxes are also showing an increase, even though property values remain strong.

Rural areas, surprisingly, are seeing some of the fastest jumps — possibly due to limited job markets and fewer refinancing options.

What caught my attention most is how uneven the trend is. Two counties in the same state can have completely different foreclosure climates depending on factors like:

• Employment stability
• Property tax rates
• Homeowner equity levels
• Local lien enforcement policies

Employment stability

Property tax rates

Homeowner equity levels

Local lien enforcement policies

From an investor perspective, this raises some big questions:

• Are we entering a phase where micro-market analysis will matter more than national trends?
• Will tighter lending standards prevent a repeat of the mass defaults we saw in the last recession, or is this the first sign of a broader shift?
• How should buy-and-hold vs. fix-and-flip investors adapt if certain markets start seeing higher distress?

Are we entering a phase where micro-market analysis will matter more than national trends?

Will tighter lending standards prevent a repeat of the mass defaults we saw in the last recession, or is this the first sign of a broader shift?

How should buy-and-hold vs. fix-and-flip investors adapt if certain markets start seeing higher distress?

I’d love to hear from others — are you seeing foreclosure activity picking up in your local market, or does it still feel like business as usual?

David Randolph · Answer

I think it requires a look by loan type. For example, FHA just announced in March 2026 that 11.52% of ALL FHA loans are delinquent. That is catastrophic.

Another stat is that over 25% of all VA loans issued in the past 2 years are "underwater" ie they owe more than the house is worth and 17% of all FHA.

Also on thing to remember if you don't want to compete against other big dogs at the courthouse steps then just reach out to these homeowners BEFORE the foreclosure date and get agreement to execute a short sale and by the buyer on the house. The banks are very desperate right now due to the backlog of delinquencies.

Joel Bongco · Answer

In Hawaii and in California, we continue to see a uptick in Foreclosures. In addition, we also see an uptick in Shenanigizers taking advantage of distressed homeowners. Some states are crack down including Arizona. Thus, I encourage REI's to be careful when dealing with distressed homeowners - https://www.azag.gov/press-release/attorney-general-mayes-su...

Chris Seveney · Answer

@Shannon Stoneback some states, like Florida, have a lot of the auctions online. I'm sure there are people who would go bid at auction for you, but that is a big trust factor, because you have to give them the cash and trust them to bid for you. It's going to be someone you completely rely on. There are not companies out there that would do it that I'm aware of.

If you're going to be investing in an area, I would recommend that you actually go visit that area and potentially even attend them in person for $250,000. Hopping on a plane for a day may cost you $300 to $500, but it is worth the investment.

Shannon Stoneback · Answer

----For an out of state investor who wants to participate, do you have any recommendations for who to hire to submit bids for you? and then do you send that person your certified funds? (specific to NC!)

--- is there seasonal uptick in when the inventory hits the Kania site?

Carson Nordmann · Answer

The YoY spike framing is tricky because 2021-2022 filings were artificially suppressed by moratoriums and servicer backlogs. A lot of the % jumps you're seeing now are base-effect, not distress. ATTOM's quarterly reports break out the comparison vs 2019 which is a cleaner baseline.

Roger Johnson · Answer

Worth adding NC-specific context here — North Carolina is one of the most dramatic examples of this shift.

NC foreclosure auctions were up 52.83% YoY in Q4 2025, and that's showing up at the courthouse. More properties, more bidders in the metros, and upset bid periods that extend further as competition intensifies.

What makes NC interesting: it's a deed state, not a lien state. No certificates, no passive redemption play. You show up at the commissioner's auction, bid, and then survive a 10-day upset bid window where anyone can raise your bid by 5% or $750 minimum.

The real opportunity is the gap between primary and secondary counties. Mecklenburg and Wake get the attention, but rural Piedmont and coastal counties — Anson, Scotland, Bladen — have growing inventory with thin turnout.

Anyone else tracking NC or seeing similar primary/secondary splits in their state?

Roger Johnson · Answer

I found a really cool software that actually does most of it for me that defiantly can be a pain.

Nick C. · Answer

Shenanigizer is a new word for me. Looks like the case against these guys is pretty solid. I hope the BP community isn't out there posing as charitable organizations, and filing false bankruptcy and probate cases.

Foreclosure Trends Are Shifting — What Does That Mean for Investors?

Foreclosure Trends Are Shifting — What Does That Mean for Investors?

Most Popular Reply

10 Replies