Q3 foreclosure starts jumped +34% q/q and +68% y/y. However, these foreclosure jumps are comparatively low to historical foreclosure activity.
Expiration of Pandemic Relief Means Rise in Foreclosure Starts
Foreclosure starts surged in Q3 from Q2 2021 as COVID-relief bailouts began expiring. Foreclosure starts jumped +34% q/q during Q3 2021 and +68% from Q3 2020.
According to RealtyTrac’s Q3 2021 US Foreclosure Market Report, mortgage lenders initiated foreclosure filings (default notices, scheduled auctions, or bank repossessions) on 45.417 properties during Q3 2021. These 45,417 filings were on top of September’s filings of 19,609, an increase of +24% from August and +102% from September 2020.
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Foreclosure Levels Comparatively Low Despite Increase
“Despite the increase level of foreclosure activity in September, we’re still far below historically normal numbers,” said Rick Sharga, executive vice president of RealtyTrac, a subsidiary company of ATTOM Data Solutions.
Sharga went on to say, “September foreclosure actions were almost 70% lower than they were prior to the COVID-19 pandemic in September 2019, and Q3 foreclosure activity was 60% lower than the same quarter that year. Even with similar increases in foreclosures over the next few months (as relief plans are set to expire), we’ll end the year significantly below what we’d see in a normal housing market.”
All of that said, Sharga added, “…there are hundreds of thousands of borrowers scheduled to exit forbearance in the next two months, and it’s possible that we might see a higher percentage of those borrowers default on their loans.”
Foreclosure Activity Up Nationwide
Lenders initiated foreclosure starts on 25,209 properties in Q3 2021, a quarterly increase of +32% from Q2 and an increase of +67% from September 2020. This quarterly increase is the first double digit quarterly percentage increase in foreclosure activity since 2014.
States with the greatest number of foreclosure starts in Q3 2021 included:
- California – 3,434
- Texas – 2,827
- Florida – 2,546
- New York – 1,363
- Illinois – 1,362
States with the highest foreclosure rates included Nevada, Illinois, Delaware, New Jersey and Florida.
Among the metros with the greatest number of foreclosure starts were:
- New York, New York – 1,456
- Chicago – 1,122
- Los Angeles – 1,102
- Miami – 992
- Houston – 866
Metros with the highest foreclosure rates included Atlantic City NJ, Peoria IL, Bakersfield CA, Cleveland OH and Las Vegas NV.
Metros seeing a decline in foreclosure starts in Q3 2021 included:
- Charlotte NC – -32%
- Portland OR – =26%
- Rochester NY – -17%
- San Jose CA – -13%
- Hartford CT – -6%
Thanks to RealtyTrac.