Foreclosures hit highest level since 2019, sparking interest from bargain hunters

After years at near record-low levels, foreclosures are on the rise again. For some homebuyers, that can mean a rare opportunity to enter the market at lower prices.

The median foreclosed home sells for about 27% below typical market value, a discount that reflects lenders’ desire for quick sales of properties they have taken over. Most foreclosed homes are sold “as-is,” leaving buyers on the hook for repairs.

At a time when home prices are hovering near all-time highs, such deals can look appealing, experts told Yahoo Finance, especially to buyers with experience navigating the complexities of the homebuying process and a willingness to do renovations.

“There are a lot of risks and a lot of complications with buying these things, so it’s not for everybody,” Realtor.com senior economist Joel Berner said. “But it’s becoming more of an option — it’s a larger share of the market.”

A foreclosure home for sale is shown Tuesday, Aug. 22, 2006 in Spring, Texas. (AP Photo/David J. Phillip) — (AP Photo/David J. Phillip) · ASSOCIATED PRESS

In the first half of 2026, some 228,000 homes in the US had a foreclosure filing, like a default notice, scheduled auction, or bank repossession, up 21% from last year and the highest level since 2019. Homes owned and listed for sale by a lender made up 1.3% of all listings in April, according to Realtor.com, the highest level for that month since 2020.

Long-term normalization

The latest uptick has brought foreclosure rates roughly in line with pre-pandemic levels. Some borrowers found themselves in trouble after Covid-era mortgage relief programs ended in 2024. Others have been stressed by the rising costs of homeownership. However, foreclosure rates are still far below levels reached during the 2008 subprime mortgage crisis — and it can take a long time, sometimes even years, before a home that enters foreclosure proceedings is actually sold.

Foreclosure sales are most common in relatively low-cost areas, where buyers frequently have lower incomes and less cushion if they run into financial trouble.

Bank-owned properties make up the highest share of listings in Lake Charles, La., at 10.2%. They’re also elevated in communities including Dayton, Ohio; Davenport, Iowa; Redding, Calif.; and parts of western Pennsylvania, according to Realtor.com data. They’re also common in parts of Alabama, due in part to state laws that give former owners the right to repurchase a property, discouraging investors from participating in foreclosure auctions.

Read more: How to get the lowest mortgage rates right now

Many foreclosed homes for sale draw strong initial interest due to their lower prices, but wind up lingering on the market because buyers are unfamiliar with buying from a bank or wary of the major repairs many of the homes need because the previous owners were unable to afford maintenance.

In recent years, mortgage servicers have been willing to work with borrowers to help them avoid foreclosure, and many homeowners in trouble could take advantage of strong market conditions to sell before losing their homes. That means the hefty discounts seen in today’s foreclosure sales may reflect the home’s condition, said Andy Walden, head of mortgage and housing market research at Intercontinental Exchange.

“Those properties may be more distressed than normal,” Walden said.

A complex process

Candess Correll, a real estate agent working in the Washington, D.C., area, tells buyers interested in foreclosures to expect limited ability to tour the home, little room to negotiate price or repairs, and a three-to-six-month closing process.

Those drawbacks often discourage first- or second-time buyers, but she’s seen experienced buyers, or those who are contractors or well-connected to contractors, have luck with the transactions.

“In the end, it does typically work out pretty well financially,” Correll said.

Last year, April and Matt Sanders bought a foreclosed home in southern Ohio sight unseen to be closer to their daughter and granddaughter. Buying a foreclosure wasn’t initially their plan, but after years of searching, they had found few options available in their budget.

When a home just four doors down from their daughter went up for auction, they decided to take a look. The listing had no photos, but they scouted what they could from the street and scoured public records and social media for clues about the home.

After getting as comfortable as they could, they won the auction, paying $212,500 for a 2,000-square-foot home with four bedrooms and two-and-a-half bathrooms.

The closing process was prolonged — they won the home in July, but court proceedings to resolve title issues meant they didn’t have the keys until November. Their advice to other prospective buyers of foreclosed properties is to get comfortable with uncertainty.

“We hurried up just to wait a really long time,” said April, 53, an infection prevention manager at a nearby medical center. “That gave us a lot of time to second-guess.”

The process of cleaning out the home and making the minimum repairs and renovations to make it livable took several additional months. They moved in last April and have enjoyed spending more time with their granddaughter. The renovation process, however, is ongoing.

“We are loving the home, but I think we have a ways to go,” April said.

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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