Foreclosures Hit Their Highest Level in 6 Years. Here’s What That Means for Buyers
Could a Foreclosure Be the Right Home for You?
During the first half of 2026, buyers purchased foreclosed homes for about 27% less than other homes on the market.
Foreclosure listings have also become a little more common. As of April, they made up 1.3% of all homes for sale, the highest level we've seen in six years.
At the same time, these homes are attracting plenty of attention. According to Realtor.com, foreclosure listings are receiving 26.5% more online views than the average home. Even with that interest, they tend to stay on the market about 11 days longer.
For many buyers, the word foreclosure can feel intimidating. While these homes can offer wonderful opportunities, they also come with a few extra considerations.
Let's take a closer look at why foreclosures are becoming more common and whether one might be a good fit for your home search.
Why Are Foreclosures Increasing?
Although foreclosure activity has increased, it's important to keep it in perspective.
Today's numbers are still well below the levels seen during the housing crisis and even below the recent peak in 2020. Many experts see this as the market gradually returning to a more typical balance rather than signaling another housing downturn.
Much of the increase can be traced back to changes following the pandemic. As mortgage forbearance and foreclosure protections ended, some homeowners found themselves facing higher monthly expenses. Rising insurance premiums, increasing property taxes, and adjustable-rate mortgage payment changes made homeownership more expensive for some families.
For homeowners whose incomes didn't keep pace with those rising costs, keeping up with payments became more difficult.
The result is that we're seeing a modest increase in foreclosed homes coming onto the market, not because of a widespread mortgage crisis, but because of changing financial circumstances for some homeowners.
What Is an REO Property?
You may hear the term REO, which stands for Real Estate Owned.
An REO home is a property that didn't sell at a foreclosure auction and has since been taken back by the lender. The lender then lists the home for sale, often at a price that's lower than comparable homes to encourage a quicker sale.
Even with attractive pricing, these homes often spend a little more time on the market because buyers naturally have questions about their condition.
Compared to traditional listings, foreclosure homes often include:
Fewer listing photos.
Shorter property descriptions.
Homes being sold as-is, meaning the seller typically won't make repairs before closing.
While that may sound concerning, buyers still have important protections.
You can still schedule a home inspection, tour the property, and work with a knowledgeable real estate professional who can research the home's history, including previous repairs, flooding concerns, septic issues, pest problems, or other factors that could affect your decision.
Many buyers are also surprised to learn that conventional financing is still available for many REO properties, depending on the home's condition and loan qualifications.
Is a Foreclosure Right for You?
The answer really comes down to your personal goals and comfort level.
If you're hoping for a home that's move-in ready with fewer unknowns, a traditional resale or new construction home may be the better choice.
However, if you're open to putting in a little extra work and would like to stretch your budget further, a foreclosure could present an opportunity to purchase a home below market value while building equity over time.
Like any real estate decision, it's all about finding the option that best fits your needs.
Things to Consider Before Making an Offer
Possible Benefits
A lower purchase price than similar homes in the area.
Less competition in some markets, since many buyers overlook foreclosures.
The opportunity to build equity through thoughtful updates and improvements.
Conventional financing may still be available for many REO homes.
Things to Keep in Mind
Most foreclosure homes are sold as-is, with few or no seller repairs.
Deferred maintenance or hidden issues may increase renovation costs.
Systems like plumbing, heating, or electrical may need attention if the home has been vacant.
Property history and disclosures may be more limited, making careful research especially important.
A Trusted Guide Makes All the Difference
A lower price can certainly be appealing, but the best value isn't always the home with the lowest asking price. It's the home that fits your goals, your budget, and your future plans.
That's why having an experienced real estate professional by your side is so valuable. Together, you can carefully evaluate the home's condition, estimate potential repair costs, and determine whether a foreclosure truly offers the opportunity you're looking for.
Every home has a story, and sometimes a foreclosure can become a wonderful new beginning. The key is having the right information and the right guidance to help you make a confident decision.