Is this a repeat of the 2008 housing bust?
The number of homeowners hit with foreclosure notices in the third quarter of the year jumped 34% from a year ago to nearly 125,000, according to a recent report from real estate data firm ATTOM. They were up 28% from the previous quarter.
Across the country, about 1 in every 1,121 properties had a foreclosure filing in the third quarter. That’s a return to almost pre-pandemic levels as foreclosure moratoriums put in place in the early days of COVID-19 have expired.
Filings included default notices, scheduled auctions, and bank repossessions.
“Foreclosures are on the rise again,” ATTOM CEO Rob Barber said in a statement. “It’s evident that some homeowners are still grappling with the pandemic’s financial aftermath or encountering new challenges.”
About 11,000 homes were repossessed in the third quarter, representing a 5% jump from a year ago.
While rising foreclosures and still-high home prices might give folks some unwelcome flashbacks to the run-up to the housing bubble that burst around 2008, real estate experts don’t believe another foreclosure crisis is looming.
In the aftermath of the Great Recession, the most dangerous mortgages with payments that ballooned sharply over time have largely been eradicated from the market. These were the loans that got many homeowners in trouble when they could no longer afford their monthly housing bills.
In addition, mortgage lenders have tightened their qualification standards to ensure only the strongest borrowers receive loans.
Finally, in a reversal from the Great Recession, there are now more buyers than there are homes for sale. This should keep home prices strong, helping to prevent another crash.
“The number of new cases filed by lenders in the third quarter did rise just a small amount from the same period last year,” Barber said. But foreclosures “actually dipped a bit quarterly — signs that the upward pattern may be easing.”
Where are foreclosure rates the highest?
Homeowners in many parts of the country that were hit hard during the foreclosure crisis of the 2000s also had higher foreclosure rates in the third quarter of this year.
New Jersey had the highest rate among the states, with 1 in every 595 properties with a foreclosure filing. It was followed by South Carolina, with 1 in every 730; Delaware, with 1 in every 739; Nevada, with 1 in every 763; and Maryland, with 1 in every 780.
Of the 223 metropolitan areas that ATTOM looked at, Houston had the highest rate, with 1 in every 371 homes in the metro receiving a foreclosure filing. Atlantic City, NJ, wasn’t far behind, with 1 in every 453. Cleveland had 1 in every 459; Bakersfield, CA, had 1 in every 456; and Columbia, SC, had 1 in every 503.
Where foreclosures are falling
Foreclosures aren’t rising in every part of the country.
This story was originally published on Realtor.com, a real estate and rentals site. In addition to homes for sale, you can find rentals like Scottsdale apartments, Austin apartments, Tampa apartments, and more.
They fell sharply in Salt Lake City, with foreclosure starts dropping 74% year over year in the third quarter. The metro was followed by Chicago, down 35%; Kansas City, MO, down 34%; Columbus, OH, down 22%; and Milwaukee, down 21%.
ATTOM looked only at metros with at least 1 million residents for this portion of the analysis.
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