What Rising Foreclosures Mean for Investors

Foreclosure activity is ticking up nationwide, signaling both risk and opportunity. While elevated rates hint at financial strain in the housing market, they also create strategic openings for real estate investors.

Foreclosure Activity Is Growing

In Q1 2025, 93,953 U.S. properties had a foreclosure filing - an 11% increase from the prior quarter. April alone saw 36,033 new filings, up nearly 14% year-over-year. While still below historic norms, this trend suggests more homeowners are feeling the pinch from:

• High mortgage rates
• Inflationary home prices
• Consumer debt
• Rising cost of living

As these pressures mount, more borrowers may fall behind on payments, triggering a steady rise in distressed sales.

States with the Highest Foreclosure Rates

Foreclosure risk is uneven across the U.S. In Q1 2025 the top locations were from the East Coast:

• Delaware led with 1 in every 761 homes in foreclosure.
• Illinois, Nevada, Indiana, and South Carolina followed closely behind.

These regions may offer increased opportunity but also increased competition.

Key Impacts for Real Estate Investors

1. Discounted Properties Are Hitting the Market
Bank-owned homes and auction sales may become more accessible. Investors who act quickly can secure below-market deals, especially during the pre-foreclosure window, when sellers are motivated to avoid losing their homes.

2. Depressed Local Values Can Create Buying Windows
Foreclosures can drag down comps, opening opportunities to scoop up homes at reduced prices. When values recover, these purchases could deliver strong returns.

3. Rental Demand May Increase
Displaced homeowners often turn to renting. This creates an opportunity to provide housing, whether long-term rentals or short-term solutions while benefiting from rising rental rates in tight markets.

4. Due Diligence Is Critical
Foreclosure properties may come with title issues, liens, or redemption period risks. Understanding local laws and reviewing each deal thoroughly is a imperative to avoid costly mistakes.

Bottom line: As a real estate investor, the foreclosure trend is something to watch. For well-prepared investors, it may be the right time to get active strategically and responsibly.

As always, smart investing starts with preparation and the right team behind you. Whether you're looking to purchase a foreclosure, diversify your portfolio through trust deed investing, or simply want to explore what’s possible through real estate investing in California, we’re here to help.

Have questions about the process or want help making your next move? Reach out to our team through our website, we’re always happy to assist.

Ken & Ari Walker

Husband & Wife Team
Phone: 707‑708‑0797 / Office: 1400 N. Dutton Ave #22 Santa Rosa, CA 95401
Ken: CA DRE Broker #01858042 / NMLS #1221130
Ari: CA DRE #01858152 / NMLS #2170867

Ken & Ari are a husband & wife team with combined 3+ decades in real estate and private money industries. They own Pacific Direct Mortgage & Real Estate, specializing in Private Money loans (also known as Hard Money home loans). Having helped thousands of Borrowers & working directly with Brokers, Agents and Lenders to help when needed with fast, flexible, alternative financing for real estate purchases and refinances throughout California. No issues with DTI ratios, credit issues, property condition, difficult to prove income ‑ we want to help!