Foreclosures are increasing across the country as Americans continue to struggle with rising interest rates and high costs of living.
Last month, there were 32,938 properties with bankruptcy filings in the US, according to new figures from the real estate data provider ATOM.
Foreclosure occurs when an owner is unable to make their monthly mortgage payments and, as a result, must forfeit rights to their property. Bankruptcy applications include notices of default, planned auctions and bank seizures.
The data for February shows that the number of bankruptcies increased by 8 percent from the previous year, but with a slight decrease of 1 percent from January, when the number of bankruptcies rose by as much as 10 percent on the month before.
The numbers expose a housing affordability crisis in the US, with some states faring far worse than others.
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South Carolina recorded the highest number of applications last month, with one for every 2,248 homes.
Delaware, which had the most bankruptcy filings in January, had the second-highest number of bankruptcy filings in February: one for every 2,428 homes.
Florida had one in 2,632 homes, Ohio one in 2,828 and Connecticut one in 2,884.
Bankruptcies have increased since late 2021 as banks make up for lost time after state and federal bankruptcy bans expired.
“The annual increase in foreclosure activity in the U.S. signals changing dynamics in the housing market,” said Rob Barber, CEO of ATTOM.
“These trends could mean an evolving financial landscape for homeowners, leading to adjustments in market strategies and lending practices.”
“The annual uptick in foreclosure activity in the U.S. signals changing dynamics in the housing market,” said Rob Barber, CEO of ATTOM.
Housing affordability across the country is the worst in decades, amid rising home prices, a lack of homes for sale and higher mortgage rates.
According to the latest data from government-backed lender Freddie Mac, the average 30-year mortgage rate is 6.74 percent.
Interest rates have soared as a result of the Federal Reserve’s aggressive rate hike campaign, which has pushed borrowing costs to their highest level in 22 years. And persistent inflation has dashed investors’ hopes for immediate rate cuts in 2024.
This perfect storm has made it increasingly difficult for many Americans to keep up with payments.
At the current rate, an average home buyer will have to pay almost $1,000 a month more than he would have bought two years ago, when interest rates were around 3.08 percent.
In February 2022, a buyer purchasing a $400,000 home with a 5 percent down payment would have to pay monthly payments of $1,619. At a rate of 6.90 percent, this rises to $2,462.
Housing affordability across the country is the worst in decades, amid rising home prices, a lack of homes for sale and higher mortgage rates
Last year, the U.S. housing market gained a massive $2 trillion as a historic shortage of homes for sale pushed up prices.
While costs have risen across the board, American savings have been steadily depleted.
Credit card debt is at unprecedented levels, and a record number of Americans took money out of their 401(K) plans last year for a financial emergency, new figures show this week.
Of those who took money out of their retirement savings, almost 40 percent did so to avoid bankruptcy. This was an increase from 36 percent in 2022.
Data from Vanguard Group, one of the largest retirement plan providers in the US, shows that 3.6 percent of participants will have made early withdrawals from their accounts in 2023
When it comes to the number of foreclosures completed in February, there was a marked difference across the country.
According to ATTOM, lenders seized 3,397 properties through completed foreclosures in February – down 14 percent from last month and 11 percent from a year ago.
Last month, experts noted that bankruptcy filings are slightly higher in January due to the progression of filings through the court system after the holidays.
The largest declines in foreclosure completions occurred in Georgia, where foreclosures fell 52 percent, and New York, where they fell 41 percent last month.
However, in South Carolina, the number of completed foreclosures rose 51 percent, while Missouri saw a 50 percent increase and Pennsylvania saw a 46 percent increase.