The latest housing market data shows an undeniable shift: foreclosure filings are climbing. After years of near-historic lows, the persistent rise is turning heads and asking a crucial question: are these tiny cracks or early warnings of a larger structural issue in the housing market?
For astute real estate investors, these changing dynamics signal potential investment opportunities in distressed properties.
The Numbers: A Sharp, Yet Measured, Increase
The data released by Attom is stark:
- There were 36,766 U.S. properties with a foreclosure filing in October.
- This represents a 19% jump from October 2024 and the eighth consecutive month of annual increases.
- Foreclosure starts (the initial phase) were 20% higher than the previous year.1
- Completed foreclosures (the final phase) saw the most dramatic increase, soaring 32% year over year.2
While these percentages are high, it’s essential to maintain perspective. Rob Barber, CEO of Attom, notes that current activity is still “well below historic highs.”3
Context is Key: Why This Isn’t the Great Recession
Before panic sets in, consider the state of the broader mortgage market as highlighted by Rick Sharga, CEO of CJ Patrick Co.:
| Metric | Peak of Great Recession | Today | Historic Average |
| Mortgages in Foreclosure | $>4\%$ | $<0.5\%$ | $1-1.5\%$ |
| Mortgages Delinquent | $\approx 12\%$ | $4\%$ | N/A |
Sharga’s takeaway? There is “no foreclosure tsunami to worry about.” Current foreclosure rates are a fraction of the financial crisis peak, and significantly below the historical average. This current trend appears to be a gradual normalization of foreclosure volumes.
🎯 Investor Focus: Where to Find Distressed Properties
The data points to specific geographies where distressed inventory is most likely to surface:
- Top States for Total Filings: Florida, South Carolina, and Illinois.
- Top Metro Areas for Filings: Tampa, Jacksonville, and Orlando (all in Florida), followed by Riverside, California, and Cleveland.
- States with Most Completed Foreclosures: Texas, California, and Florida.
For investors focused on flipping houses or rental property investment, these states and metropolitan areas are worth watching closely. High numbers of completed foreclosures suggest more inventory coming onto the market at potentially distressed prices. Given the strong demand, especially in lower price ranges, these properties are likely to sell quickly.
⚠️ A Closer Look at Vulnerability: FHA Loans and Market Pressures
While the overall market remains stable, there are pockets of elevated risk that investors should monitor:
- FHA Loan Delinquencies: Delinquencies on loans insured by the Federal Housing Administration (FHA) are over 11% and account for 52% of all seriously delinquent loans. Experts anticipate an increase in FHA loans entering foreclosure in 2026.
- Market Stress Points: States grappling with both falling home prices and soaring insurance premiums (like Florida and Texas) are seeing an uptick in defaults.
The Broader Economic Picture
The slow rise in foreclosures is occurring alongside other economic headwinds that could indirectly impact homeowners:
- High Consumer Debt: American households are carrying an all-time high in consumer debt.4
- Rising Delinquencies: Defaults are increasing in other types of consumer credit (e.g., credit cards, auto loans).
- Weakening Job Market: A cooling labor market adds pressure to household finances.
These factors, combined with still-high mortgage rates and easing but stubbornly high home prices, create pressure for recent buyers who may have counted on refinancing to lower rates sooner.
🔑 Key Takeaways for Real Estate Investors
The current environment is characterized by normalization, not collapse. This gradual rise in foreclosures offers strategic opportunities for investors prepared to buy distressed assets.5 Focus your due diligence on the states and metro areas identified, particularly monitoring the influx of completed foreclosures in Texas, California, and Florida.
This is the time to build relationships with asset managers and local agents who specialize in REO (Real Estate Owned) properties and bank-owned homes. Be ready to move quickly to secure these investment properties before they are absorbed by the strong market demand.