Home sales have soared since the start of the COVID-19 pandemic for several reasons. Mortgage rates are near historic lows. People have decided to relocate from the largest metropolitan areas, particularly on the two coasts, to more affordable cities with better quality of life. Working from home also has been a factor in the ability to relocate. And, finally, middle- and upper-class incomes have stayed strong over the past year and a half.
One of the effects of the strong housing markets is foreclosure rates that are low. It is easy to remember, by contrast, the housing collapse in the Great Recession, when home prices in many cities fell by double-digit percentages. The home price surge of 2005 and 2006 turned into a nightmare in 2007 and 2008. Foreclosures skyrocketed as a result.
While forecloses likely will stay low, at least through this year, some cities have much higher rates than others. Real estate research firm ATTOM just released its May 2021 U.S. Foreclosure Market Report. It shows there were 10,821 U.S. properties with foreclosure filings, which is up 23% from a year ago.
While the increase is large in percentage terms, the figures are not particularly bad when viewed historically. RealtyTrac Executive Vice President Rick Sharga said, commenting on the data: “While the increase in foreclosure activity is significant, it’s important to keep these numbers in perspective.”
High foreclosure rates tend to be in America’s older industrial cities. For example, among the 220 metropolitan areas with populations above 200,000, the highest foreclosure rate was in Champaign, Illinois, where one in every 2,420 housing units had a foreclosure filing. It was followed by Peoria, Illinois, where the figure was one in every 3,030 housing units and Cleveland, Ohio, where the figure was one in every 3,715 housing units.
Among states, those with the highest rates in May 2021 were Nevada, with one in every 5,535 housing units with a foreclosure filing. Delaware was next with one in every 5,854 housing units and then Illinois with one in every 5,903.