The cost of living in the Florida is spiraling out of control, and as families struggle to make ends meet, another ominous trend is rearing its head: a surge in foreclosures. May saw a distressing 7% increase in nationwide foreclosure-related filings, with 35,196 properties falling victim to the foreclosure crisis. This alarming rise is a startling 14% higher compared to the same period last year, according to real estate data group ATTOM.
In May alone, lenders initiated the foreclosure process on 23,245 properties, marking a 4% increase from the previous month and a troubling 5% surge from a year ago. Florida, with a staggering 2,901 foreclosures, led the nation in foreclosure starts, closely followed by California with 2,451 and Texas with 2,286. Illinois and New York also experienced high foreclosure starts at 1,358 and 1,287, respectively.
"The recent increase in foreclosure filings nationwide indicates a trend that has been observed throughout the year, and what we have expected to occur," warns Rob Barber, CEO of ATTOM. This upward trajectory suggests the possibility of continued heightened activity, especially as foreclosure completions have experienced the largest monthly increase this year. It's imperative that we monitor the potential impacts this may have on the housing market."
Although foreclosure rates currently remain on par with pre-pandemic lows, the surge in distressed borrowers indicates a "normalization" process after a period when many individuals benefitted from loan forbearances and government assistance, according to Fitch analysts. Unfortunately, Florida. workers' incomes continue to fall short of pre-pandemic levels while the cost of consumer goods and services remains stubbornly high, placing them at greater risk of falling behind on payments.
Florida emerges as a state with a higher concentration of large metro areas experiencing elevated foreclosure rates, as revealed by ATTOM's data. In May, cities such as Lakeland, Elkhart, Cleveland, Palm Bay, and Ocala, Florida, recorded the highest foreclosure rates among the 223 metropolitan statistical areas with populations of at least 200,000. Similarly, Jacksonville, Baltimore, Chicago, and Orlando, Florida, suffered from elevated foreclosure rates among metro areas with populations greater than 1 million.
The exorbitant cost of living in Florida has surged since the pandemic, negatively impacting real earnings. While there is no official measure of inflation for Florida, using the Bureau of Labor Statistics' inflation measure for the South Atlantic region reveals a distressing decline in real hourly earnings, dropping from $25.12 in February 2020 to a meager $24.82 in April. These small movements make a big difference in the long run and Florida is on the brink of watching much of the real estate market fall into foreclosure in 2024.
