Foreclosures ticked up in January, signaling distress among some homeowners, according to a new report.
The report by Attom, an analytics company that specializes in real-estate data, noted that the number of U.S. properties with foreclosure filings rose to 33,270 in January, up 5% from a year ago. Foreclosure filings in January were also up 10% from December.
“We observed a slight uptick in foreclosure filings, which may be partially attributed to the typical post-holiday progression of filings through the legal system,” Attom Chief Executive Rob Barber said in a statement. “However, other external factors may be at play such as escalating interest rates, inflation, employment shifts and other market dynamics.”
Foreclosure filings include default notices, a public notice that a homeowner is now in default on their mortgage because they’ve missed so many payments. The filings can also include notices of scheduled auctions, meaning that a foreclosed house will be sold at a public auction, and notices of bank repossessions, which means a bank has taken ownership of the property.
Foreclosures shot up as the real-estate bubble burst in the lead-up to the 2008 financial crisis, and the number of homes with at least one foreclosure filing soared from 717,522 in 2006 (0.6% of all housing units) to 2,330,483 in 2008 (1.8% of all housing units), according to the Pew Research Center.
But January’s “notable increase” in foreclosure activity, as Attom put it, was not worrisome, one economist told MarketWatch.
The uptick in foreclosure activity comes as high mortgage rates and home prices have pushed up the cost of home ownership in the last two years. The median price was $379,100 as of January. The median monthly mortgage payment was roughly $2,600, based on current rates, according to Redfin.
“It’s possible that some homeowners are feeling mortgage payment stress as their excess pandemic savings have run dry, higher prices eat more of the monthly budget and student loan repayments have resumed,” Mark Fleming, chief economist at First America, told MarketWatch. Credit-card and auto-loan delinquencies are also at the highest point in over a decade.
“But foreclosures are still few and far between (below 0.5 percent of all mortgages) as homeowners also have record amounts of home equity,” he added.
“Mortgage payment stress is necessary, but not sufficient” for people to end up in foreclosure, Fleming said, unless they lack equity in their home.
Where home foreclosures rose
Lenders repossessed nearly 4,000 properties through completed foreclosures in January, Attom noted, which was up 13% from a month ago. It was the first month-over-month increase in completed foreclosures since July 2023, the company noted.
States that saw the biggest jump in repossessions included Michigan, where the rate rose by 200%; Minnesota, up 47%; and California, up 43%.
Among the 224 metro areas with a population of at least 200,000, repossessions in January were the highest in Detroit, Chicago and New York City.
The highest foreclosure rates in January were in Delaware, where one in every 2,269 housing units had a foreclosure filing, followed by Nevada and Indiana.
Lenders also started the foreclosure process on 21,770 properties in January, which was up 6% from the previous month.
Among the metro areas with populations over 200,000, foreclosure starts were the highest in New York City, Houston, and Los Angeles. In New York, N.Y., lenders started the foreclosure process on 1,470 properties.