Home foreclosures are increasing fastest in these 5 states — is one of them yours?

Real estate

By Megan Heaney, Fox Business

Home foreclosures rose again in February, as Americans continue to grapple with the ongoing cost of living crisis.

That's according to a new report published by real estate data provider ATTOM, which found there were 32,938 properties in February with foreclosure filings, which include notices of default, scheduled auctions and bank repossession. This represents an 8% increase from the previous year, although it was down 1% from the previous month.

“The year-over-year rise in foreclosure activity in the United States indicates changing dynamics within the housing market,” said Rob Barber, CEO of ATTOM. “These trends could indicate an evolving financial landscape for homeowners, leading to adjustments in market strategies and lending practices.”

However, the number of foreclosures decreased in 28 states in February. Lenders repossessed 3,397 properties in February, down 14% from the previous month and 11% from a year earlier. The largest declines occurred in Georgia, where completed foreclosures decreased by 52%, and in New York, with a decrease of 41%.

However, foreclosures have risen in other states. In South Carolina, foreclosures rose 51%, while Missouri saw a 50% jump, and in Pennsylvania a 46% increase. Foreclosures in Texas rose by 7%, and in Indiana by 0.8%.

Although foreclosures are on the rise, they remain well below the levels recorded during the 2008 financial crisis.

But the problem may soon get worse as rising home prices, mortgage rates and property taxes hurt Americans.

Housing affordability is at its worst in decades, thanks to soaring home prices and mortgage rates. Together, the two have helped push the typical salary needed nationwide for homeownership to $106,500 — a staggering 61% increase from the $59,000 required just four years ago, according to Zillow.

There are several reasons to blame the affordability crisis.

The Federal Reserve's aggressive rate hike push sent mortgage interest rates above 8% for the first time in nearly two decades last year. Interest rates were slow to ease, hovering near 7% as hotter-than-expected inflation data dashed investors' hopes for an immediate rate cut.

The average interest rate on a 30-year fixed loan rose to 6.74% this week, well above the pandemic-era lows of 3%, Freddie Mac reported.

Although mortgage rates have nearly doubled what they were three years ago, home prices have barely budged.

This is largely due to the lack of homes available for sale. Sellers who maintained a low mortgage rate before the pandemic began have been reluctant to sell, leaving few options for eager potential buyers.