Foreclosure Filings Are Rising in 2026. What That Means for Property Values and Appraisals

Foreclosure filings are climbing again in early 2026, and that headline has been circulating widely. HousingWire recently reported on ATTOM’s January 2026 U.S. Foreclosure Market Report, which showed a year-over-year increase in foreclosure activity to start the year (https://www.housingwire.com/articles/foreclosure-filings-january-2026/). Numbers like that get attention quickly, especially among homeowners and buyers who remember how the last major housing downturn unfolded.

It helps to pause before drawing big conclusions. A foreclosure filing does not mean a home has been lost or that it is about to be sold at a steep discount. Filings include notices of default, scheduled auctions, and lender repossessions. Those are different stages of the process, and many properties never complete the full foreclosure cycle.

Why Foreclosure Filings Are Increasing

A large number of homeowners were temporarily shielded from foreclosure during 2020 and 2021. As those protections fully unwind, the system is normalizing. Some of what is being reported now reflects a return to more typical levels of enforcement rather than the beginning of a collapse.

At the same time, housing costs have risen. Mortgage rates remain elevated compared to pandemic lows. In several states, especially Florida, insurance premiums and property taxes have increased meaningfully. When monthly expenses climb, and income does not keep pace, financial stress builds gradually. Foreclosure activity often rises in that kind of environment, not all at once, but in pockets.

Even with the recent increase, current foreclosure levels remain well below what the country experienced during the 2008 to 2010 crisis. That context matters. A rise does not automatically signal a crash. It does mean that distress is no longer at artificially suppressed levels.

How Foreclosure Filings Influence Home Values

An increase in foreclosure filings influences home values, but not in a uniform way.

Picture a stable single-family neighborhood where one home enters foreclosure. If that property sits vacant for months, falls into disrepair, and ultimately sells at a discounted price, that sale influences future appraisals. When a foreclosure sale is clearly inferior due to condition or deferred maintenance, adjustments are necessary. When it is competitive with other homes and sells with proper market exposure, it is not treated much differently than a traditional sale.

In a different setting, such as a small condominium development with multiple units in default, foreclosure activity affects marketability more broadly. Buyers pay attention to association finances. Lenders review delinquency rates. Appraisers need to comment on the financial health of the association and whether the level of distress reflects higher risk. In that environment, foreclosure activity becomes part of the larger value discussion rather than a one-off event.

Sometimes filings increase, but actual resale inventory remains limited. Lenders work out payment plans. Owners sell before the auction. Investors step in early. In those cases, foreclosure data rises on paper while the number of discounted, bank-owned properties available to the public stays relatively modest. The effect on pricing may be subtle rather than dramatic.

What Appraisers Are Seeing in Real Assignments

Foreclosure trends show up in appraisal assignments in practical ways.

One common scenario involves homeowners seeking refinancing or loan modifications after falling behind on payments. An appraisal is ordered to determine the current market value as part of that process. In those cases, the property condition becomes central. Deferred maintenance, incomplete repairs, or storm-related damage can materially reduce value. The difference between as is value and the repaired value becomes critical to underwriting decisions.

Financial stress also appears in estate and divorce matters. When one party is concerned about equity erosion or potential foreclosure risk, an objective valuation helps establish a clear baseline. Distressed sales in the surrounding market are analyzed carefully to determine whether they reflect typical buyer behavior or exceptional circumstances. Appraisers do not ignore them, but they do not automatically treat them as equal to well-exposed, arms-length transactions.

Investor purchases are another piece of the picture. Some buyers monitor foreclosure filings closely and approach owners before a property reaches auction. When those transactions close, the question becomes whether the sale reflects open market value or a price influenced by urgency and limited exposure. Appraisers evaluate marketing time, listing history, and sale conditions before deciding how much weight to give the transaction.

None of this is theoretical. These patterns appear in appraisal reports regularly, often in ways that require explanation rather than alarm.

Practical Takeaways for Buyers and Homeowners

If you are a homeowner, focus first on what is happening in your immediate area. National foreclosure filings are informative, but your neighborhood data carries more weight. Look at recent closed sales. Review current listings. Notice whether bank-owned properties are a visible presence or a small minority.

Buyers hoping for widespread discounts should be realistic about how foreclosure pipelines work. Many distressed properties are resolved before they reach auction. Others sell close to market value if they are well-maintained and properly marketed. A filing alone does not create a bargain.

Sellers should understand that appraisers analyze all relevant data, including distressed sales, but adjustments are based on condition, exposure, and comparability. A well-maintained property with strong demand does not automatically decline in value because filings increased across the state.

Agents navigating conversations with concerned clients can benefit from grounding the discussion in local evidence rather than broad headlines. Inventory levels, pricing trends, days on market, and buyer activity still matter more than a single metric.

Why Careful Appraisal Analysis Matters More Right Now

When foreclosure filings rise, even modestly, uncertainty increases. Buyers scrutinize pricing. Lenders review risk more carefully. Homeowners want to understand whether equity is holding or softening.

A thorough appraisal brings structure to that uncertainty. Distressed sales are identified and analyzed appropriately. Market exposure is documented. Comparable properties are selected and adjusted based on measurable differences rather than assumptions. That kind of analysis separates market noise from actual value trends.

For property owners and professionals in Southwest Florida, foreclosure activity is one more factor that must be evaluated in context. Gulf Stream Residential Appraisal provides detailed, market-supported valuation services that address distressed sales, shifting inventory levels, and local risk factors directly within the report. If you need clarity on how rising foreclosure filings are affecting your specific property or neighborhood, contact Gulf Stream Residential Appraisal to request a quote or schedule a consultation.