Foreclosure activity climbed again in July. According to ATTOM’s latest data, filings rose 10% compared to the same month last year. That’s a real number, and it deserves a straight answer: is this the beginning of something serious, or just the housing market finding its footing after years of artificial calm?
Here’s my read on it — and what it means if you’re buying, selling, or investing in the Phoenix metro right now.
The Numbers Behind the Headline
ATTOM tracks three types of foreclosure activity: default notices, scheduled auctions, and bank repossessions. A 10% annual increase sounds alarming until you compare it to where we came from.
During the pandemic, foreclosure filings were essentially turned off. Federal moratoriums and forbearance programs kept millions of distressed borrowers in their homes — which was the right call at the time, but it created a backlog. As those programs unwound, filings started climbing. The 10% year-over-year figure in July continues a trend we’ve been watching since late 2023.
A few data points worth keeping in mind:
- As of recent market data, one in every roughly 1,400 housing units in the US received some form of foreclosure filing in July
- Bank repossessions (REOs) — where the lender actually takes back the property — remain far below pre-2008 levels nationally
- Loan delinquency rates, while inching up, haven’t approached the double-digit percentages seen during the financial crisis
The 10% jump is real. A crash signal it is not. I’ve written about why 2026’s foreclosure gains are not a housing crash signal — the underlying math just doesn’t support the panic narrative.
What’s Driving the Rise
Three forces are pushing these numbers higher, and they’re all interconnected.
Affordability fatigue. With 30-year rates hovering in the mid-to-upper 6% range, more homeowners who stretched to buy at peak prices in 2021 and 2022 are struggling to maintain payments alongside higher insurance premiums, rising HOA fees, and general cost-of-living pressure. Phoenix saw some of the sharpest price run-ups in the country during that window — Maricopa County median prices shot past $450,000 — and some of those buyers are now underwater or cash-squeezed.
FHA and VA loan stress. A disproportionate share of the foreclosure increase nationally is concentrated in government-backed loans. FHA borrowers, who typically have thinner equity cushions and lower credit scores, are more vulnerable when income disruption hits. This isn’t unique to Arizona, but Sun Belt metros that leaned heavily on FHA purchase volume during the boom are feeling it more than average. Foreclosure activity in the first half of 2026 climbed 21%, with FHA and VA mortgages bearing the brunt.
Job market softening. July’s broader employment picture wasn’t encouraging. When income gets disrupted and there’s no equity buffer to tap, foreclosure becomes the path of least resistance.
What This Looks Like on the Ground in Phoenix
I’m not seeing a wave of distressed properties flooding the Valley the way we did between 2008 and 2012. Back then, you couldn’t drive through Laveen or Buckeye without seeing bank-owned lockboxes on every third house. That’s not what’s happening today.
What I am seeing:
- More pre-foreclosure activity in the $250,000–$375,000 range — entry-level inventory where buyers pushed hardest during the pandemic and now have the least cushion
- A slight uptick in trustee sale listings in areas like Surprise and parts of the East Valley
- Sellers in those same areas becoming more negotiable on price, concessions, and closing timelines — which creates opportunity for ready buyers
The distress is real but targeted. Luxury inventory above $800,000 in Scottsdale or Paradise Valley is largely unaffected. The stress is concentrated in the starter and mid-range price bands, where equity gains were strong but owner financial reserves were often thin.
Opportunities for Buyers — and the Risks
A rising foreclosure environment creates genuine buying opportunities, but not the slam-dunk deals you might imagine.
Here’s how to think about it:
- Trustee sales require cash, fast due diligence, and a high tolerance for title risk. Not for most buyers.
- Bank-owned (REO) properties are more accessible and come with cleaner title, but banks price them to move — not to give away
- Short sales are starting to reappear. They take time, patience, and a seller’s lender who cooperates. When they work, the discount is worth it.
- Pre-foreclosure direct outreach works for investors with established networks, but compliance matters — Arizona has specific rules around contacting distressed homeowners
The real edge right now isn’t in chasing distressed properties. It’s in recognizing that their presence softens the broader market slightly, creating more negotiating room on standard listings too.
The Bottom Line
A 10% annual rise in foreclosure filings is a signal worth tracking — not one worth panicking over. The housing market is normalizing after years of artificially suppressed distress activity. Equity levels across Phoenix remain healthy in aggregate. Most homeowners sitting on properties purchased before 2020 still have significant cushion.
If you’re a buyer, this is worth paying attention to as a market dynamics indicator, not a fire sale announcement. If you’re a seller in the sub-$400,000 range, it means you’re competing with a small but growing pool of distressed inventory — pricing accurately matters more than ever.
Keep watching ATTOM’s monthly data. If bank repossessions start spiking — not just filings — that’s when the conversation changes.