Posted almost 2 years ago

Is Atlanta Burning (AGAIN)? Foreclosure Starts Up 50% Year-Over-Year!

Today is October 7, 2019.

Last month, on September 14, I received an email from an investor who specializes in single-family home cash flow deals in Detroit, Michigan. The subject field read "U.S. Foreclosures Down 24 Percent Annually in August."

You know me, always up for a "good news" story, so I read the email. I then examined the original source post closely and noticed a few key points had been conveniently omitted from the email.

Specifically, what rocked my little world was a datapoint buried waaay down in paragraph 5: Foreclosure starts in Metro Atlanta were up 50% from August 2018 to August 2019!

Wait, WHAT?!?

But it gets so much worse.

Metro Atlanta is made up of several counties. That scary number from the report was for the entire Atlanta–Sandy Springs–Roswell, GA Metropolitan Statistical Area. What would the breakdown look like by county, I wondered.

So, ranked by population (data obtained from Wikipedia), here are the August 2019 foreclosure starts (data from RealtyTrac, a subsidiary of ATTOM Data Solutions and the publisher of the report) for the 12 largest Metro Atlanta counties:

  1. Fulton [pop. 1,041,423] - Up 116.7% Y-O-Y
  2. Gwinnett [pop. 920,260] - UP 21.5% Y-O-Y
  3. Cobb [pop. 755,754] - UP 9.7% Y-O-Y
  4. DeKalb [pop. 753,253] - Up 13.5% Y-O-Y
  5. Clayton [ pop. 285,153] - Up 51.6% Y-O-Y
  6. Cherokee [pop. 247,573] - Up 5.0% Y-O-Y
  7. Forsyth [pop. 227,967] - Up 28.6% Y-O-Y
  8. Henry [pop. 225,813] - Up 92.9% Y-O-Y
  9. Hall [pop. 199,335] - Up 233.3% Y-O-Y
  10. Paulding [pop. 159,445] - Up 66.7% Y-O-Y
  11. Douglas [pop. 143,882] - Up 173.3% Y-O-Y
  12. Coweta [pop. 143,114] - Up 44.4% Y-O-Y

    Are you feeling queasy yet, Metro Atlanta?

    Foreclosure starts are UP in every single one of the top 12 largest counties in Metro Atlanta. In most cases, by double digits!

    What does that mean? It means a ton of folks here are starting to have serious trouble paying their mortgages!

    More than twice as many people in Fulton County, the biggest one, are getting behind in their mortgages now than a year ago. More than three times as many people in Hall County are falling behind on payments now compared to August 2018. Nearly twice as many in Henry County. And on and on.

    Something is going on in Metro Atlanta, and it's not good.

    I don't know what it is yet, but you can bet I intend to get to the bottom of this!

    Comments (14)

    1. Thank you for sharing this insightful content. 

      1. @Umar Javaid Thanks for reading and for letting me know this was useful for you!

    2. Thanks for reading, @Wendy Smith! Yes, I do see this as an opportunity, especially once we uncover the root cause. To be continued...

    3. Thanks for posting this blog Mitch! It's funny how we can feel we have a pretty good feel for our local markets but also get blindsided by negative trends with foreclosures. I don't think the expected market cool down will be anything like the last but this does not bode well for the real estate market in the near future. I've been looking into stats for the Houston market to see if the trend matches up here. 

      I consider Atlanta and Houston sort of cousin cities since they are so diversified I'll keep you posted.

      1. @Ryan Collins Thank you for reading and for your comments! I checked Houston and it was actually DOWN year-over-year.


        Lubbock County, which includes Lubbock, Texas, which I'm looking carefully at, was up 254.5% Y-O-Y! Are you kidding me?

    4. Thanks Mitch for posting about this.  I was watching this angle of investing and got side tracked from it this year.  I believe that it's time for the foreclosure cycle to rebound because of the laypersons belief that the economy is doing well and they've begun to overextend themselves financially again.  When you come up with some numbers on sharing the ATTOM Data let me know.  [email protected]   I'm new to this site.  Thanks!

      1. @'Asa' John Murray Thank you and I think you are absolutely RIGHT! I'll be in touch about the ATTOM data feed.

    5. Great insight and write-up. Those numbers are staggering to say the least. I've noticed my pre-foreclosure list has gotten larger.

      is unemployment on the rise in Atlanta? Or could these be a mix of absentee owners/investors defaulting in addition to owner occupants? 

      I ask because ive come across a lot of tired investors/landlords who own in Atlanta area. Some overpaid, some just dealing with bad tenants etc. Just my thought in trying to understand what could be cooking.

      As always, thank you, Mitch for providing us with some food for thought!!!

      1. @Chuks Erinne Thanks for reading and for commenting! I think you're right that knowing the mix of investors to owner occupants would help us better understand what's going on. We're working to get the full Metro Atlanta dataset; let me know if you'd be interested in going in on it with us.

    6. Looking forward to your updates!

      1. Thanks @Eric Stieler! I'm talking to ATTOM Data Solutions today about perhaps arranging an investor syndicate that purchases the monthly Metro Atlanta dataset for mutual use. Let me know if you might be interested.

    7. Great article, Mitch!  Thanks a bunch for sharing.  I will monitoring this myself.

      1. Thanks @Joel White! You previously shared your theory that this was related to dramatic increases in property taxes, and I think you may be on to something! Still digging...

        1. Interesting article Mitch. I came to Atlanta in 2017 and I find it interesting and alarming the number of foreclosures I now see especially for Henry and Clayton counties, not to mention Dekalb. 

          Is this a concern; yes. Is this opportunity for investors; perhaps. One thing is certain there is something brewing and we should take note.