Foreclosures on the Rise

Foreclosures have long since been a staple in many investors’ collection of deal-finding strategies. And they’re probably the most well-known way to buy property at a discount. If you’ve ever had a casual conversation about your recent deals with someone who knows nothing about real estate, you’ll probably hear them ask, “did you buy them on foreclosure or something?”

So I think it goes without saying that foreclosures are an ideal lead source for real estate investors. It is one of the only motivations where you can be 100% certain that a seller needs to take immediate action or they’ll lose their house.

What differs among investors is when to pursue a foreclosure lead. Do you try to contact and work with the seller before they lose their house, wait until the house is up for bid at sheriff sale, or start making offers on properties that failed to sell at auction (REOs)?

Truth be told, all three are great strategies, and each require different skillsets and risk tolerances. Our focus for this article will be foreclosure filings.

A lender can file a foreclosure complaint after 120 days of non-payment. Once filed, the homeowner has the right to cure the foreclosure by paying back all that is owed, or they can pursue an alternative solution. Alternatives include, but are not limited to, loan modification, short sale, repayment agent, deed in lieu of foreclosure, or listing the property with an agent.

Now that we covered a little about how foreclosures work, let’s look at how foreclosure numbers have been trending. You probably could have guessed that foreclosures were at an all-time high in 2010 after the economic crash. However, they have been consistently decreasing every year after.

Following this steady decrease, foreclosures nearly halted for about 1.5 years during the COVID-19 pandemic. As you can see in the graph below, the foreclosure moratorium began in March 2020 and then extended until mid-2021. In Brown County, it wasn’t until January 2022 that we saw a significant increase in foreclosure filings, up 260% from the month prior.

While foreclosures have certainly bounced back, they haven’t quite risen to the level some expected to see after the moratorium ended. If fact, the average number of monthly foreclosure filings so far in 2022 are 26% lower than they were in pre-pandemic 2019.

Interestingly, if no moratorium had ever been enacted and the decreasing trend of foreclosure rates had continued as they were, we would have expected to see about the same number of foreclosures now as originally forecasted. So at this point, it appears the moratorium has had little to no impact on the current number of foreclosures being filed within Brown County. Of course, we still have nearly half a year left before we can confirm.

Until then, it may help to understand where Brown County compares to the rest of the state and which cities in Brown County are seeing the most foreclosures. On average, Brown County accounts for about 3% of the state’s foreclosure filings, ranking it in the top 6 highest in the state.

Regarding cities within Brown County, it’s probably obvious that Green Bay will be the majority, given its population. However, De Pere is the runner up, coming in at 11% of all foreclosures in the county, followed by Pulaski, Denmark, and Suamico.

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