Foreclosures in Arizona are increasing after years of minimal activity. More homeowners are falling behind on payments, and more properties are entering the foreclosure process. While the situation is not yet a crisis, the trend marks a shift in the Arizona housing market that both buyers and sellers should take note of.
“We’re not seeing it at an alarming rate yet, but it is happening,” says Geoffrey Ball, President and Mortgage Loan Originator at HD Lending, LLC, who has worked in Arizona since 2003. “And I think we have to pay attention to it.”
Foreclosure Activity Is Rising
Foreclosure filings in Arizona have been gradually increasing over the past several months. Unlike the surge during the 2008 crash, today’s numbers are still moderate, but the shift is clear compared to the near-zero activity seen in recent years.
From 2010 through 2023, rising property values allowed troubled homeowners to sell for a profit or refinance, often masking underlying financial problems. Lenders also saw fewer defaults as home prices climbed. Now, with the market flattening and mortgage rates remaining high, those options have faded.
“When property values go up, it erases issues,” Ball explains. “Now, as markets are getting tighter, you’re seeing people get into trouble.”
Drivers of the Uptick
Three main factors are contributing to the increase in foreclosures:
1. Rising Living Costs: Over the past three years, insurance premiums, property taxes, utilities, and groceries have all increased. Homeowners already stretching to meet mortgage payments are being pushed over the edge by these higher costs. “There comes a point where you hit the wall where you can’t borrow more,” Ball says.
2. Higher Unemployment: Job losses and reduced work hours are becoming more common in Arizona. While unemployment rates are not yet high, even small increases make it harder for some households to keep up with mortgage payments.
3. Inherited Debt and Title Issues: More homeowners are inheriting properties with unresolved debts. Ball reports an increase in cases where new owners discover unpaid IRS liens, HOA debts, or other judgments attached to homes that they’ve inherited. In some instances, HOAs are not just filing liens but moving forward with foreclosure proceedings.
Why This Isn’t a Repeat of 2008
Unlike the 2008 housing crisis, today’s foreclosures are rising slowly, and lenders are more proactive in helping homeowners stay in their homes. Loan modifications, forbearance programs, and payment plans are now standard practices.
“Lenders are working it out with people,” Ball says. As a result, many homeowners who fall behind on payments can catch up or restructure their loans, preventing a rapid spike in foreclosures. The current increase is gradual, and most homeowners have more options to avoid losing their homes. Still, the trend signals that financial stress is building for some Arizona homeowners.
Impact on Homebuyers
For buyers, the rise in foreclosures may present new opportunities, but it does not mean a flood of discounted properties is imminent.
Foreclosed and pre-foreclosure homes are appearing more frequently, especially in areas outside the strongest markets, such as Paradise Valley, Scottsdale, Chandler, and the northwest Phoenix corridor. These properties often sell below market value because sellers – whether banks or distressed owners – are motivated to close quickly.
However, purchasing a foreclosure can involve risks. Many of these homes need repairs, and some have title issues or unpaid liens. Buyers should get a thorough inspection and work with a real estate attorney to ensure there are no hidden problems.
Opportunities are most common in the under-$500,000 segment, where inventory has grown, and buyers have become more cautious. Homes in this range are staying on the market longer, and sellers are often more flexible on price and terms.
Advice for Sellers
For sellers, the increase in foreclosures is a warning to price homes realistically and act quickly if under financial pressure.
Overpricing a property in the current market leads to extended time on the market, which can deter buyers. If you’re facing rising expenses, job loss, or inherited debt, it’s better to sell before falling too far behind on payments. Selling early gives you more control and often leads to a better financial outcome than waiting until foreclosure is unavoidable.
If you are already behind, contact your lender immediately. Loan modifications and forbearance programs can provide relief, and in some cases, a short sale – where the lender allows you to sell for less than you owe – can help you avoid foreclosure altogether.
A Market at an Inflection Point
Arizona’s foreclosure numbers are still relatively contained, but the direction matters more than the level. After years in which rising home values masked financial strain, the market is now revealing where households are most vulnerable. If living costs continue to climb or employment softens further, foreclosure activity could edge higher – especially in price tiers where buyers are already stretched.
At the same time, this is not a market unraveling overnight. Lenders remain more flexible than they were in past cycles, and many homeowners still have equity cushions that give them options. The next year will likely be defined less by dramatic headlines and more by quiet adjustments – realistic pricing, earlier intervention from borrowers, and more selective buyers evaluating risk carefully.
About the Expert: Geoffrey Ball is President and Mortgage Loan Originator at HD Lending, LLC, serving Arizona since 2003. He specializes in private lending for owner-occupied homes, long-term investors, and construction projects across metropolitan Phoenix, Tucson, and northern Arizona.
This article is based on information and perspectives provided by a local mortgage professional familiar with the Arizona housing market. It is intended for general informational purposes only and does not constitute legal, financial, or investment advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
This article was sourced from a live expert interview.
Every month we conduct hundreds of interviews with active market practitioners - thousands to date.
In a real estate market marked by fragmentation and volatility, some investors are finding success by remaining adaptable rather than specializing narrowly. Eric Scheffler, co-founder and ma...
A significant obstacle to development in many cities is not zoning or neighborhood opposition, but the lack of clarity in the approval process itself. In Farmington Hills, Michigan, a new sy...
The homeowners association (HOA) management industry is undergoing a significant shift as technology enables more communities to move away from traditional property management companies. Wit...
The increasing digitization of real estate has its limits, particularly in the luxury segment, according to Carolyn Fugere, Co-President and Chief Sales Officer of Sotheby’s Internatio...
Chicago’s real estate market is experiencing an unexpected renaissance led by local investors, while international capital remains notably absent, according to a leading market expert....
Transaction volume across Northern Nevada’s commercial real estate market has dropped sharply, according to Ted Stoever, Executive Vice President at Colliers. Stoever attributes the sl...
