The Hidden Opportunity: Why Foreclosure Activity Is Rising—And What It Means for Investors
Foreclosure filings jumped 17% year-over-year in Q3 2025, with bank repossessions up 33%. While this signals distress for some homeowners, it creates unprecedented opportunity for cash buyers and wholesalers who know where to look.
The Hidden Opportunity: Why Foreclosure Activity Is Rising—And What It Means for Investors
Foreclosure activity is climbing across the U.S., but don't let headlines scare you. For savvy investors and wholesalers, rising foreclosure rates represent opportunity, not crisis.
Here's what the latest data reveals—and how you can position yourself to capitalize.
Foreclosure Activity Is Accelerating
After years of pandemic-era protections and forbearance programs, distressed properties are returning to the market:
- 101,513 U.S. properties had foreclosure filings in Q3 2025—a 17% increase from a year ago (ATTOM, Q3 2025)
- Bank repossessions surged 33% year-over-year, signaling more distressed inventory entering the market (ATTOM, Q3 2025)
- Foreclosure starts rose 20% year-over-year in September 2025, up to 23,761 properties (ATTOM, September 2025)
- The foreclosure process has accelerated to 608 days from over 800 days a year ago—meaning distressed properties are moving through the system faster (Real Estate News, October 2025)
Bottom line: More foreclosures are hitting the market, and they're moving through the pipeline faster than they have in years.
Where Foreclosure Activity Is Hottest
Foreclosure rates aren't uniform across the country. Some states and metros are seeing significantly higher activity:
States with highest foreclosure rates (September 2025):
- Florida (worst in nation)
- Delaware
- Nevada
- Indiana
- South Carolina
(Source: ATTOM, September 2025)
Top metros by foreclosure volume:
- Texas: 9,736 foreclosure starts in Q3 2025
- Florida: 8,909 starts
- California: 7,862 starts
- Illinois: 3,515 starts
- New York: 3,234 starts
(Source: ATTOM, Q3 2025)
What this means: If you're investing in Texas, Florida, California, Illinois, or New York, you have access to the largest pools of distressed inventory in the country.
Why Foreclosures Are Rising Now
Several factors are driving the increase:
1. End of Pandemic Protections
COVID-era forbearance programs and foreclosure moratoriums have expired, exposing borrowers who were previously protected.
2. Economic Pressures
- Rising insurance premiums, especially in disaster-prone areas like Florida and California
- Higher property taxes from reassessments
- Adjustable-rate mortgage resets catching homeowners off guard
- Inflation and consumer debt squeezing household budgets
3. Interest Rate Shock
Homeowners with adjustable-rate mortgages (ARMs) from the low-rate era are facing sharply higher payments.
Legal consultation data confirms the trend: Calls to LegalShield attorneys about foreclosures spiked in May 2025 to the highest level since April 2020, marking significant homeowner distress (LegalShield, August 2025).
This Is NOT 2008
Before you panic or think the housing market is collapsing, here's critical context:
- Foreclosure activity remains well below Great Recession levels
- Most homeowners hold significant equity, giving them options like short sales or refinancing before foreclosure
- One in every 1,402 homes had a foreclosure filing in Q3 2025—far from crisis levels (ATTOM, Q3 2025)
- Lending standards today are much stricter than in 2008, meaning fewer risky loans
The market is stabilized, not collapsing. This is a return to normal foreclosure activity after years of artificially low numbers.
The Opportunity for Investors and Wholesalers
Rising foreclosures create three major opportunities:
1. Pre-Foreclosure Deals
Homeowners facing foreclosure are often highly motivated sellers. They need to sell quickly to avoid the foreclosure hitting their credit, making them ideal candidates for wholesale deals.
Your advantage: You can offer solutions—like a quick cash sale—that help them exit before foreclosure while securing a property at below-market value.
2. REO Properties (Bank-Owned)
With bank repossessions up 33%, more REO inventory is hitting the market. Banks want these properties off their books quickly, often pricing them aggressively to move fast.
Your advantage: REO properties are typically sold as-is and priced for quick sale—perfect for fix-and-flip investors or wholesalers with strong buyer lists.
3. Auction Opportunities
Foreclosure auctions provide access to deeply discounted properties, though they require cash and fast decision-making.
Your advantage: Investors with cash can scoop up properties at significant discounts, then either rehab and flip or wholesale to other investors.
How to Find Foreclosure Opportunities
Traditional methods:
- Public records at county courthouses
- Foreclosure listing sites (RealtyTrac, Auction.com)
- Direct mail campaigns to pre-foreclosure homeowners
- Driving for dollars in distressed neighborhoods
The smarter way: Use platforms that aggregate distressed property data and connect you with motivated sellers and cash buyers in one place.
PropPipeline helps Texas investors and wholesalers:
✅ Find off-market and distressed properties faster
✅ Connect with verified cash buyers actively looking for deals
✅ Move inventory quickly without manual buyer management
✅ Focus on acquisitions instead of chasing leads
What This Means for Your Business
If you're a wholesaler or investor, now is the time to double down on distressed property strategies:
- Build relationships with pre-foreclosure homeowners who need quick exits
- Monitor REO inventory in your target markets
- Strengthen your cash buyer network to move deals fast
- Position yourself as the solution for distressed sellers who can't wait for traditional buyers
Foreclosure activity is rising, but crisis for some means opportunity for others. The investors who act now—who build systems to find and move distressed properties quickly—will thrive in this environment.
Ready to tap into the distressed property market?
Join PropPipeline today and start connecting with motivated sellers and cash buyers in Texas.
Sources
- ATTOM Data Solutions, Q3 2025 & September 2025 Foreclosure Market Reports
- Real Estate News, October 2025
- LegalShield, August 2025 Foreclosure Crisis Report