Foreclosures climb 41% off pandemic lows

California foreclosure filings in 2023 were up

41% from the pace of the previous three years.

My trusty spreadsheet looked at Attom’s tally of homes with any level of foreclosure filings — from first warning to final bank sale — for the 50 states and the District of Columbia.

So, is last year’s jump in foreclosure activity a worrisome pattern, or simply a bounce off pandemic-era lows tied to generous help for stressed borrowers?

Glass half-empty

California’s 32,905 foreclosure filings in 2023 were No. 2 among the states. Economic rivals Florida was No. 1 at 35,813 and Texas was No. 3 at 30,467.

Yes, California foreclosure activity was 41% above the 2020-22 pace — the 13th smallest jump among the states. The national pace was up 55%.

The biggest leaps were found in D.C. (up 403%), West Virginia (up 155%), Oregon (up 116%), New York (up 102%), and Idaho (up 101%). Texas was No. 9, up 85%, and Florida was No. 32, up 46%.

Glass half-full

When we compare last year’s mortgage payment problems to pre-pandemic 2015-19 — a yardstick for “normal” conditions — California foreclosure activity is actually down 59%. That’s on par with a 60% drop nationally.

Biggest dips? Washington (off 79%), Wisconsin (off 78%) and Vermont (off 76%). Florida was No. 5, off 73%.

Foreclosure increases were found in North Dakota (up 63%) and D.C. (up 51%). And Texas had the fifth-worst performance, with filings off only 29%.

Let’s be clear, we’re nowhere near the foreclosure folly surrounding the Great Recession.

California’s 2023 filings are 93% below the average pace of 2007-14. Nationally, foreclosures are down 84% from those dark days, with only Arizona (off 95%) and Nevada (off 93.5%) with larger declines than the Golden State.

Florida had the eighth-biggest dip (89%) while Texas was down 68%, No. 31.

Bottom line

Housing’s got numerous challenges — but skipped mortgage payments aren’t one of them.

First, the job market remains strong, so borrowers without paychecks are rare. Then there are rising home prices that can help avoid some forced home sales.

And do not forget that amid coronavirus-linked economic gyrations, troubled borrowers in 2020-22 got plenty of help. There were limits on lenders repossessing homes. And bankers offered generous loan modifications.

But as this foreclosure help has ended, a bounce up in filings could be expected.

Also, look at California’s seemingly large count of troubled mortgages as a share of all the state’s housing. Remember, the Golden State is the nation’s largest housing market.

Last year, California had 23 foreclosure filings for every 10,000 residences. That’s the 19th highest level among the states and better than the nation’s 26 per 10,000 rate. Florida was No. 8 at 37. Texas was No. 15 at 27.

And ponder back to 2009, as that era’s housing bubble was exploding: California had 475 foreclosure filings for every 10,000 homes — 20 times more than in 2023.