Foreclosure Starts are Up 19%—These Counties are Seeing the Highest Distress

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Foreclosure activity doesn’t end quietly—and December 2025 proved that point emphatically.

After a relatively mixed fall, Foreclosure Starts jumped sharply nationwide, rising nearly 19% month over month and more than 44% year over year. 

That acceleration at the very front of the foreclosure pipeline matters because Starts represent the earliest public signal of homeowner distress—well before properties reach auction or become bank-owned. 

For real estate investors, Foreclosure Starts are often the first place where opportunity begins to form. They highlight where financial pressure is building, where motivated sellers may soon emerge, and where future auction and REO inventory is likely to materialize in the months ahead.

December’s data tells a clear story: Distress reaccelerated heading into year-end, with especially sharp increases in several key states and counties that investors should be watching closely as we go deeper into 2026.

National Foreclosure Starts Rebound Strongly

In December 2025, the U.S. recorded 27,640 Foreclosure Starts, representing:

+18.94% month over month

+44.66% year over year

This was one of the strongest monthly increases in early-stage filings we’ve seen in 2025. While foreclosure activity often slows toward the end of the year, December broke that seasonal pattern decisively.

The year-over-year growth is especially notable. Compared to December 2024, Foreclosure Starts are nearly 45% higher nationwide, reinforcing that financial strain remains elevated for a growing number of households despite a resilient labor market.

State-Level Breakdown: Five Markets Driving the Increase

Florida

Florida continues to be one of the most active foreclosure states in the country. December’s increase followed November’s pullback, signaling that early-stage distress remains persistent rather than temporary.

3,274 Starts

+16.14% MoM

+81.39% YoY

California

California saw a meaningful monthly rebound but remains essentially flat year over year. This suggests short-term volatility rather than a structural acceleration—at least for now.

2,389 Starts

+14.31% MoM

-0.21% YoY

Ohio

Ohio posted one of the strongest month-over-month increases among major states, reinforcing its role as a steady but growing foreclosure market.

1,060 Starts

+24.12% MoM

+14.10% YoY

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North Carolina

North Carolina was the notable exception. Starts fell sharply in December, suggesting that much of the state’s distress has already moved further down the pipeline into auctions.

337 Starts

-35.81% MoM

-3.44% YoY

Texas

Texas delivered the most dramatic increase of any state in December. Starts surged more than 57% month over month and nearly 60% year over year—an unmistakable signal that early-stage distress is accelerating rapidly.

4,104 Starts

+57.12% MoM

+58.09% YoY

County-Level Insights: Where New Distress Is Emerging

State-level averages only tell part of the story. When we drill down to the county level, we can see where Foreclosure Starts are meaningfully rising—and where future opportunities may develop.

Florida: Central and Gulf Coast pressure builds

Despite Florida’s statewide growth in Foreclosure Starts, the increases were not evenly distributed.

Lee County recorded a meaningful jump in Starts, continuing its pattern of elevated distress along the Gulf Coast.

Orange County (Orlando) also saw a noticeable increase, reflecting growing pressure in investor-heavy neighborhoods.

Miami-Dade and Broward Counties remained elevated but showed less acceleration than earlier in the year.

Investor takeaway

Florida’s distress is broadening geographically, not contracting. Central Florida and Gulf Coast markets are likely to feed auction activity in early 2026.

California: Inland Empire reawakens

California’s December rebound was driven primarily by inland markets.

Riverside County posted a clear month-over-month increase in Starts.

San Bernardino County followed a similar pattern, particularly in areas dominated by investor-owned rentals.

Los Angeles County showed modest growth but remained relatively stable.

Investor takeaway

The Inland Empire continues to act as California’s foreclosure pressure valve. Investors focused on early outreach should monitor Riverside and San Bernardino closely.

Ohio: Columbus emerges as a standout

Ohio’s December increase was heavily influenced by:

Franklin County (Columbus), which saw one of the strongest MoM increases in the state.

Cuyahoga County (Cleveland) rebounded after a softer November.

Hamilton County (Cincinnati) remained steady.

Investor takeaway

Columbus continues to outperform other Ohio metros in early-stage distress, making it a key market to watch in 2026.

North Carolina: Starts cool as auctions take over

North Carolina’s drop in starts was driven by:

Mecklenburg County (Charlotte) and Wake County (Raleigh) both showed reduced early-stage filings.

This aligns with the sharp rise in Notice of Sale activity seen elsewhere in the state.

Investor takeaway

North Carolina’s foreclosure pressure has not disappeared—it has simply moved downstream into auctions.

Texas: A surge that demands attention

Texas’ spike was widespread and powerful.

Harris County (Houston) accounted for a large share of the increase.

Dallas and Tarrant Counties also posted sharp gains.

Bexar County (San Antonio) continued its steady upward trend.

Investor takeaway

Texas’ fast, nonjudicial foreclosure process means today’s Starts can become auctions in a matter of weeks. December’s surge is likely to translate quickly into a visible opportunity.

How Investors May Use Foreclosure Start Data

Foreclosure Starts are not just statistics—they are signals. Investors may use this data to:

Identify pre-foreclosure outreach opportunities before auctions are scheduled.

Anticipate future Notice of Sale and REO inventory months in advance.

Focus marketing and acquisition efforts on counties where Starts are accelerating.

Plan retirement-account investments using a Self-Directed IRA or Solo 401(k), where early-stage timelines allow for proper structuring, financing, and due diligence.

By tracking Starts alongside later-stage filings, investors can build a more complete, forward-looking strategy rather than reacting after inventory hits the open market.

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