Is there a foreclosure rise? In recent weeks, there has been a slight increase in the interest rate on 30-year fixed-rate mortgages, albeit only by a fraction of a percent. This uptick in rates comes at a time when housing affordability remains a critical topic of discussion throughout the United States. With factors such as inventory, cost, and equity acting as indicators, the ongoing issue of inflation further complicates the situation.
Florida’s Foreclosure Challenges: Availability and Affordability Issues in the Sunshine State
According to real estate data analysis conducted by ATTOM, despite the beginning of a housing market cooldown, foreclosures across the United States have been steadily increasing for almost two years. One state that has been significantly affected by this trend is Florida, which has experienced some of the highest levels of foreclosures in the past year, shedding light on the challenges of availability and affordability in the region.
Understanding the Data: Analyzing ATTOM’s Findings on Foreclosure Filings and Completed Repossessions
ATTOM’s real estate data revealed that for 21 consecutive months, there were 31,557 properties with foreclosure filings, marking a 36% increase from January 2022. From December 2022 to January 2023, there was a 2% increase in foreclosures. However, amidst this concerning trend, there is a glimmer of hope.
ATTOM CEO Rob Barber expressed his views on the situation, stating,
“The uptick in overall foreclosure filings nationwide points toward a trend that may suggest more increased activity is on the horizon as we enter the new year. While both completed foreclosures and foreclosure starts have stalled slightly over the past month, the annual increase in overall activity seen over the past 21 months may indicate a more substantial trend that could continue into 2023.”
In January, mortgage lenders completed nearly 4,000 repossessions, representing a 6% increase from December. However, this number was down 19% compared to the previous year, marking the first annual decrease in completed foreclosures since June 2021, as per ATTOM’s data. Florida witnessed the largest annual decrease in repossessions, with a 53% drop, while states like Maryland, Michigan, New Jersey, and Texas experienced smaller decreases ranging from 23% to 14%.
On the other hand, states like Pennsylvania and California saw increases in repossessions, with New York leading the pack with a staggering 76% increase over the course of a year.
Navigating Monthly Foreclosure Patterns: States with the Highest Foreclosure Starts in January 2023
Delving deeper into the monthly outlook, ATTOM reported, “States that saw the greatest number of foreclosure starts in January 2023 included: California (2,513 foreclosure starts); Texas (2,136 foreclosure starts); Florida (1,725 foreclosure starts); New York (1,375 foreclosure starts); and Illinois (1,309 foreclosure starts).” Overall, January witnessed nearly 21,000 properties initiating foreclosure processes, representing just a 1% drop from December 2022 but a significant 75% decrease compared to the previous year.
Amidst these foreclosure trends, the ability to afford a home remains a daunting challenge, whether it’s for a purchase or retention. Freddie Mac, the federally-backed mortgage company, reported a rise in the 30-year fixed rate to 6.12%, marking a 0.03% increase from the previous week. Sam Khater, Freddie Mac’s Chief Economist, commented on the situation, saying, “Following an interest rate hike from the Federal Reserve and a surprisingly strong jobs report, mortgage rates increased slightly this week. The 30-year fixed-rate continues to hover close to six percent, and interested homebuyers are easing their way back to the market just in time for the spring homebuying season.”
Tackling Housing Affordability: Legislative Efforts and Federal Programs to Address the Crisis
Addressing the concerns surrounding housing affordability has become a top priority for federal and state officials and lawmakers. The Florida Legislature is currently considering new laws aimed at creating workforce housing, known as the “Live Local Act.” Multiple state lawmakers have identified housing as a crisis and their primary focus for 2023. At the federal level, various solutions and programs are being explored and extended, building on the relief options implemented during the COVID-19 pandemic.
The most recent Consumer Price Index highlights that housing costs were the driving factor behind the monthly increase in the index for all items, excluding food and energy. Between rent and mortgages, costs have risen by 0.8% month-over-month for each category. Over the past year, the shelter cost index has witnessed a significant 7.5% increase.
Foreclosures Across the U.S.
Based on ATTOM’s data, SoFi reported that Florida had the 12th-highest number of foreclosures across the United States as of December 2022. According to SoFi, out of nearly 10 million housing units in the state, almost 2,500 properties had gone into foreclosure. Furthermore, Florida’s foreclosure rate stands at one in every 3,964 homes.
SoFi also highlighted the drastic increase in foreclosures throughout the country in 2022, stating, “With a total of 248,170 initiated, U.S. foreclosures rose a staggering 169 percent from the previous year.” The housing industry has faced significant challenges due to high mortgage rates, which have caused a dramatic cooling of what was once a hot market. As of January 12th, 2023, a typical 30-year fixed mortgage carried an interest rate of 6.33%, representing a 0.15% decline from the previous week. Despite this decline, these rates are already considerably lower than the peak reached in 2022, which stood at a record-breaking 7.08% towards the end of the year, as reported by SoFi.
The rise in foreclosures remains an ongoing challenge in the real estate market. As the market moves forward, it will be crucial to implement effective measures that provide relief to homeowners and potential buyers alike, ensuring a stable and sustainable real estate landscape for the future.
