Special Report

This Is the State With the Most Foreclosures

The U.S. housing market has been through a period of unprecedented rise in home prices over the last two years. At the pace of the last several months, the only period that matches it is 2005-2006, just before the housing market implosion and the Great Recession. When the housing bubble burst, foreclosures nationwide spiked. Currently, the state with the highest foreclosure rate is Illinois.

Home prices nationwide have risen nearly 20% in recent months compared to the previous year’s figure. In some markets, this number has been well above that level. (This is the most expensive home for sale in your state.)

The spike in home prices has been driven by several factors. First among these is near record low mortgage rates. Last year, these dipped below 3% for a 30 year fixed interest rate home loan. Unfortunately for buyers, mortgage rates surged above 5% in the last several weeks. It is too early to tell if this will cool off the home price increase trend.

Another reason for the jump is that people have decided to leave expensive coastal cities like New York and San Francisco for cheaper places. Finally, Americans have become more mobile. The COVID-19 pandemic caused many companies to shutter their offices and tell their employees to work from home. (Here are 25 cities where homes are selling the fastest.)

Foreclosure rates have been unusually low since the housing market began to recover in 2011. Banks have become more careful who they offer loans to. Credit-worthy buyers have replaced those who took out subprime mortgages.

But after this long spell of low foreclosures, they have begun to rise again. According to ATTOM, a research firm, and parent of RealtyTrac, there were “a total of 78,271 U.S. properties with a foreclosure filing during the first quarter of 2022.” This is up by 132% from the same period a year ago. 

There are some ready explanations for the change. Rick Sharga, executive vice president of market intelligence at ATTOM commented: “Foreclosure activity has continued to gradually return to normal levels since the expiration of the government’s moratorium, and the CFPB’s enhanced mortgage servicing guidelines.” CFPB stands for Consumer Financial Protection Bureau. 

To identify the state with the most foreclosures, 24/7 Wall St. reviewed the report U.S. Foreclosure Activity Sets Post Pandemic Highs in First Quarter of 2022 from ATTOM Data Solutions. States are ranked by the foreclosure rate — the number of total properties with foreclosure filings per housing units, from lowest to highest.

Nationwide, there was one foreclosure per every 1,795 housing units. The state with the highest foreclosure rate was Illinois, where one out of every 791 housing units was in foreclosure,, followed closely by New Jersey at 1 per 792. South Dakota, meanwhile, had the lowest foreclosure rate, at 1 in every 17,724 housing units.

California, the most populous state, led all states with 5,378 properties that began the foreclosure process in the first quarter, out of the national total of 50,759. Total foreclosures in California in the quarter were also the highest of all states and amounted to 8,243, or 1 in every 1,746 — the 12th highest foreclosure rate.

Click here to see the state with the most foreclosures

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.