Home Foreclosure Rates are Hitting Record Lows in the U.S. – My Debt Calculator

Foreclosure rates have dropped by nearly 85% from their 2009 high in the United States. Data released by the Federal Reserve reveals that there were only about 85,000 foreclosures throughout the country during the last quarter of 2016.

To put that in perspective, there were around 550,000 foreclosures during the first quarter of 2009. In fact, foreclosure rates have never been this low since the Fed started publishing it’s Microeconomic Data report in 2003. There are about 126 million single family residences in the U.S., giving us a foreclosure percentage of about .07% or close to 7 out of every 10,000 homes.

Part of the reason for the drop in foreclosures is affect that a stronger economy has on the housing market. New buyers looking to purchase a home are being met with more stringent lending requirements than in the past, making it far more likely that they will make on time payments. Those who are already homeowners are benefiting from an uptick in wages and very low interest rates, making their mortgage payments more affordable relative to the economic conditions towards the end of the last decade.

Some economists are predicting an even steeper decline in foreclosure rates as the housing market continues to rise, letting existing homeowners cash out equity when they sell, making it easier for them to make mortgage payments on their next house.

Across the nation, even in the hotbeds of foreclosure activity during the 2008 housing crisis, foreclosure rates are historically low. During the first quarter of 2009, about 1.5% of homeowners in Nevada were facing foreclosure, a rate so obscenely high that it had never been seen before in the U.S. in the post-Depression era. Today, that rate is down to .035% of homeowners. Every state has a lower foreclosure rate now than in 2014, when foreclosures reached their lowest rates in nearly a decade.

Credit scores seem to be making a slight rebound as well, with the U.S. average at the end of 2016 being 695, which was the same as 2015 but over the 693 average for 2014. Scores hit a valley in 2010 at 687 but have recovered since then (if you’re curious about your credit score, you can find it here). Since the algorithms used to determine credit scores do change over time, it’s difficult to say for certain what normalized credit scores would be over the last 12 years.

Data for the first quarter of 2017 will be out later this month.