Foreclosures Are Up in California—But That Doesn’t Mean Trouble for the Housing Market
With rising living costs and interest rates still making headlines, it's only natural to wonder how stable the housing market really is. In California, where home prices are among the highest in the nation, even the slightest shift can spark concerns—especially with news of a recent increase in foreclosure filings.
But let’s be clear: this isn’t 2008, and this small uptick in foreclosures doesn’t signal a market crash. In fact, it may be just the opposite—a reflection of a more normalized market after years of pandemic-era protections.
Foreclosures in California Are Rising—But Still Historically Low
According to ATTOM’s Q1 2025 report, foreclosure activity has increased slightly in California, especially in counties like Riverside, San Bernardino, and parts of Central Valley. However, the numbers remain well below historical norms. Compared to the years leading up to and during the 2008 crisis, current foreclosure levels are still significantly lower.
During the crash, homeowners were saddled with risky, high-leverage loans and little to no equity. When home values dropped, they had no choice but to walk away. Today’s California homeowners are in a much stronger position. Lending standards have tightened, and many owners have locked in low fixed rates over the past several years—giving them financial breathing room.
Equity is the Game-Changer
One of the biggest differences now? Equity.
Thanks to sustained price growth in areas like Orange County, San Diego, and the Bay Area, most California homeowners have built up substantial equity. If someone hits financial hardship, they’re far more likely to sell at a profit or break even rather than go into foreclosure. This has kept distressed property inventory low and home values relatively stable, even in the face of economic uncertainty.
As Rick Sharga, CEO of CJ Patrick Company, said, “Homeowners—including those in foreclosure—possess an unprecedented amount of home equity.” That equity is acting as a safeguard against a repeat of the mass defaults of the past.
What This Means for California Investors and Buyers
For investors, this environment still offers solid opportunities—especially in cities where job growth, infrastructure expansion, and housing demand remain strong. If you're considering buying in SoCal or the Bay Area, remember: tight inventory and equity-rich sellers keep the market competitive.
On the construction and development side, projects are moving forward cautiously, but demand remains high for modern multi-family units and sustainable single-family homes. Investors who understand local zoning, permitting, and development trends have a real advantage in this environment.
Bottom Line
Yes, foreclosure numbers in California have inched up—but they’re still low compared to historical averages, and the overall housing market remains on solid ground. Equity, responsible lending, and strong demand are keeping things stable.
If you’re looking to invest in California real estate, don’t let the headlines distract you. Now’s the time to focus on long-term growth, smart location choices, and building wealth through well-informed property decisions.
