Foreclosures Jump to Six-Year High as US Homeowners Face Rising Insurance and Tax Bills

Foreclosures rise back to pre-pandemic norms — and that matters for buyers and investors

Real estate in the USA is showing strains that many expected would take longer to appear after the pandemic-era pause on foreclosures. New data show foreclosure activity climbed sharply in the first quarter of 2025, pushing levels to what used to be considered normal before COVID relief programs flattened the curve.

The snapshot is stark: nearly 119,000 properties had a foreclosure filing in Q1 2025, a 26% increase year-over-year, and the highest quarterly tally since Q1 2020, according to Attom, as reported by the Wall Street Journal. Our analysis finds that this is less a calamity than a correction back to pre-pandemic behavior — but it still signals stress among a subset of homeowners, especially where holding costs have spiked.

Why this story matters to buyers, owners and investors

We think this trend changes the calculus for several groups:

• For buyers, rising carrying costs and the prospect of more foreclosures should sharpen due diligence on property tax trends and insurance costs.
• For owners, especially those who purchased during the past few years at higher mortgage rates, the risk of being underwater is real if local values fall.
• For investors, more foreclosure filings mean supply may rise in some markets, but that supply comes with financial, legal and renovation risks.

I’ll walk through the numbers, the causes, who is most exposed, what relief options remain, and pragmatic steps market participants should consider.

The data: clear increases in filings and household bills

The most widely cited figures are these: ~119,000 foreclosure filings in Q1 2025, up 26% from Q1 2024, per Attom. That level is the highest since the first quarter of 2020, when pandemic mortgage relief measures had sharply reduced foreclosure activity.

Other mounting household costs are part of the story:

• Average annual homeowners insurance rose to $2,948 in 2025, an increase of 12% from 2024, according to Insurify.
• Average property tax burdens rose to $4,427, up 3%, based on Attom data.
• The average monthly payment on all outstanding U.S. mortgages reached a record $2,005 in Q4 2024, per Realtor.com; the average payment for new buyers first crossed the $2,000 threshold in September 2022.

These figures matter because many borrowers face escalating non-mortgage carrying costs that feed into escrow accounts or must be paid out of pocket. When insurance and property tax bills jump, cash-strapped owners can quickly fall behind.

What's driving the uptick in foreclosures?

Several linked forces are at play, and we should separate cause from correlation.

• Elevated carrying costs. Steeper homeowners insurance and property tax bills raise the monthly and annual cash burden. Insurance rates have risen in several states because of weather-related losses, reinsurance costs and underwriting changes; property tax increases reflect reassessments in hotter markets and rising municipal budgets.

• Mortgage-rate effects and purchase timing. Many homeowners who bought in the last few years did so when rates were already elevated relative to the rock-bottom rates available earlier this decade. Those buyers face higher payments and in some metro areas have seen home values soften, creating negative equity for a subset of borrowers.

• End of pandemic-era relief. For several years the federal government and agencies provided pause-button policies that reduced foreclosures and forced sales. Those programs expired or were scaled back, removing a safety net for owners in trouble.

• Market normalization. Part of the increase is a return to pre-COVID norms. The bottom was artificially low during the pandemic; returning to typical foreclosure volumes can look alarming even if broader household finances are not collapsing.

I find the most persuasive explanation is a mix: a partial return to normal plus localized financial pressure where taxes, insurance and dues rose fastest.

Who is most at risk?

Not all homeowners face the same exposure. The groups I worry about most are:

• Recent buyers who financed at high rates and paid top dollar in overheated pockets. If local values fall, they can be underwater quickly.
• Owners with thin reserves or who were stretched on monthly budgets before tax and insurance hikes.
• Renters-turned-owners who miscalculated carrying costs or counted on rising rents to offset payments.
• Borrowers with adjustable-rate mortgages that reset upward, though most of the legacy reset risk has passed since interest-rate volatility slowed.

Conversely, many long-term owners with low fixed rates remain insulated from payment shocks. As the Realtor.com data show, a large share of the mortgage portfolio still carries rates well below today’s originations.

Relief options have narrowed — what changed in loss mitigation

A critical factor shaping outcomes is the availability of workout options. During the pandemic a range of forbearance and modification paths kept people in their homes. Many of those options are no longer as accessible.

A notable policy change: the Federal Housing Administration (FHA) now limits homeowners to a loan modification to avoid foreclosure only once every 24 months. That rule change reduces flexibility for FHA borrowers who need repeated help.

Other channels remain, but they are more constrained:

• Loan modification programs still exist at Fannie Mae, Freddie Mac and private servicers, but underwriting is stricter today.
• Short sales and deeds-in-lieu of foreclosure are available but often reduce net proceeds to sellers and affect credit.
• Nonprofit housing counselors approved by HUD can help negotiate with servicers; we recommend involving them early.

The bottom line: homeowners who face trouble will find fewer one-size-fits-all relief options than in 2020–2022, so early action matters.

What investors should read from these trends

If you invest in U.S.