In a market where skyrocketing home prices and property taxes are becoming the norm, a less welcome trend is making a comeback: foreclosures. While we’re nowhere near a Great Recession-style avalanche, some regions are feeling the pressure more than others.
Let’s be clear, this isn’t a nationwide catastrophe. According to a new analysis by Realtor.com, the recent uptick in foreclosures is highly concentrated. However, there are several key pockets in the U.S. where the foreclosure boom is becoming all too real.
Heading the list is Atlantic City, New Jersey. As of June, this city saw almost 7 out of every 10,000 homes facing the dreaded “F” word. Not far behind is Florence, South Carolina, with 6 out of every 10,000 homes, and New Haven, Connecticut, with 5.6 of every 10,000 homes.
Here’s a closer look at the top 10 cities and their foreclosure rates per 10,000 homes:
- Atlantic City, New Jersey, 6.8
- Florence, South Carolina, 6
- New Haven, Connecticut, 5.6
- Baltimore, Maryland, 5.5
- Mobile, Alabama, 5.3
- Orlando, Florida, 5.1
- Macon, Georgia, 4.8
- Philadelphia, Pennsylvania, 4.8
- Peoria, Illinois, 4.5
- Modesto, California, 4.3
According to real estate data provider ATTOM, foreclosures across the U.S. have surged by 13% in the first half of 2023 compared to the previous year, affecting one out of every 752 homes. This rise is partly due to the lifting of the pandemic foreclosure moratorium in 2021 and the subsequent catch-up in stalled activity. However, increased property taxes due to higher home prices have also played a significant role.
The average property tax on a single-family home climbed 3% to $3,901 in 2022, marking an increase from the 1.8% rise in 2021, as per ATTOM data.
Realtor.com research analyst Hannah Jones pointed out that “as property values have exploded in some areas … property taxes have as well.” This surge can make homes unaffordable for owners even with low mortgage rates.
Despite the fact that 90% of homeowners are enjoying mortgage rates below 6%, the median home price in the U.S. is a staggering 44% pricier than pre-pandemic levels, as per Redfin analysis.
High mortgage rates and elevated home prices have been limiting the housing supply for over a year now. Prospective homebuyers may have to play the waiting game until mortgage rates drop back to the 5% range, as this could potentially free up more inventory on the market. In the meantime, savvy investors will be keeping a keen eye on these unfolding market dynamics.