Home Foreclosures Surge in These 3 States

Home foreclosures in the U.S. dropped last month, but financial experts don't expect the numbers to continue in that direction in the new year. For three states in particular, foreclosures are surging, indicating troubling economic times ahead.

There were 32,120 U.S. properties at some point in the foreclosure process in November, down 7 percent from October, according to ATTOM, which compiles land, property and real estate data. Overall, completed foreclosures were down 32 percent from last year, with lenders repossessing 2,558 properties in November.

Some states had far higher foreclosure numbers than others. Delaware, Maryland and Ohio had the highest rates of completed foreclosures, while Bakersfield, California, and Cleveland, Ohio, were the two metropolitan areas with the highest rates.

A mix of factors led to the decline, like continued pandemic relief efforts and government moratoriums. Still, the foreclosures were at a higher yearly average, up 5 percent from the same time last year. And there's reason to suspect the foreclosures will climb in the coming months.

"While we've observed a modest decrease in U.S. foreclosure activity most likely due to seasonal factors, it's essential to note that these fluctuations are a part of the cyclical nature of the market," ATTOM CEO Rob Barber said in a statement. "As we look ahead to 2024, we anticipate a potential uptick in foreclosure activity as various economic factors evolve and market dynamics shift."

Financial and retirement adviser Drew Stevens said the overall yearly uptick in foreclosures can be attributed to confidence in the economy slipping. Many companies, from Hasbro to Maersk, are laying off employees, which inevitably fuels a potential spree of foreclosures.

"Employees who bought high-priced pandemic homes are not able to afford them," Stevens told Newsweek. "Adjustable rate mortgages are still available, and with interest rates 40 percent higher than two years ago, many who bought high-priced homes at low rates can no longer afford the higher payment."

Homeowners across the board are facing higher property taxes and food inflation, and many will begin to cut corners to get by. Inflation currently stands at 3.1 percent, with food prices a large reason, up 2.9 percent year over year.

State Struggles

The highest rates of foreclosure filings were in Texas, California and Florida, with each state having somewhere between 2,000 and 3,000. More than 20,000 properties started the foreclosure process in November, marking a 4 percent decline from last month but an 8 percent jump from a year ago.

According to financial expert Markus Kraus, owner of Trading Verstehen, Texas and Florida both saw rapid population growth in recent years, leading to higher property values. In 2022, Texas' population surged by nearly 1.6 percent. Florida, meanwhile, gained more residents at a rate of nearly 2 percent as many Americans ditched cities with a high cost of living and colder temperatures.

California as well deals with hefty home prices, with the median at $787,000, compared to the national median of about $410,000.

"Texas and Florida's rapid population growth has led to higher property values," Kraus told Newsweek. "This increase strains homeowners financially. California faces similar issues with its high property costs."