Why Rising Foreclosures Aren’t Creating Deals — Yet

Foreclosure activity is rising again in the U.S., but the market is not producing the “distressed deal” inventory many buyers expect. The key reason is structural: the data most people cite counts foreclosure filings (early-stage signals), while discounted opportunities usually require completed outcomes (REOs or forced sales that actually reach the market).

What the latest foreclosure data actually says

ATTOM’s most recent reporting shows foreclosure filings have been running higher year-over-year through 2025, with tens of thousands of properties each month entering some stage of the foreclosure process. That total typically includes default notices, scheduled auctions, and bank repossessions (REO). In other words, a “foreclosure filing” is not one thing—it’s a pipeline.

Why higher filings still aren’t turning into “cheap homes”

The primary disconnect is timing and conversion. Many filings are early-stage and do not convert into bank-owned inventory quickly. Foreclosure is a multi-step process measured in months (and often longer in judicial states), and a meaningful portion of homeowners avoid completion by curing delinquency, entering loss mitigation, or selling conventionally before auction.

The second reason is balance-sheet reality: homeowner equity remains a powerful shock absorber. Even with affordability pressure and pockets of price softness, the equity position of many mortgaged homeowners provides an exit ramp that did not exist at scale in 2008–2011. This reduces the share of distressed properties that become REOs—and it’s REOs that most reliably produce discounts.

Geography matters more than headlines

State “top foreclosure rate” lists can be directionally useful, but they often mask the real story. Foreclosure activity is highly localized: a small number of counties or metros can skew a statewide rate, and state-level averages rarely predict where an investor will actually see pricing power break. If you’re hunting for opportunity, metro- and neighborhood-level signals are more actionable than statewide rankings.

• Filings tell you where stress is forming.
• Completions (REOs) tell you where supply pressure may hit.
• Local inventory + price cuts tell you whether stress is becoming opportunity.

Bottom line: rising foreclosure activity in 2025 is a real signal of strain, but the market has not yet shifted into a phase where that strain reliably converts into widespread, discounted inventory. For buyers and investors, the edge right now comes from tracking the pipeline downstream—and doing it locally.