California Pre-Foreclosure Rates See Significant Drop in May 2025—But the Struggles Behind the Numbers Remain

A New Decline in Pre-Foreclosures—But Not a Victory Yet

In May 2025, California recorded 2,626 pre-foreclosure filings, marking a striking 27.75% drop from the previous month and a 27.44% decline compared to the same time last year. On the surface, those numbers paint a picture of progress. And in some ways, they are: the state hasn’t seen figures this low since mid-2021, when foreclosure moratoriums enacted during the pandemic suppressed filings drastically. But behind every decline is a more complex story—one where the pain of housing insecurity hasn’t vanished but has rather shifted, hidden beneath improved headlines.

The data underscores a years-long trend toward stabilization in the California housing market. But for struggling homeowners—many of whom are low-income families grappling with systemic challenges beyond mortgage delinquency—the threat of losing the roof over their heads is still very real.

A Momentary Reprieve, Not a Resolution

A 27.75% month-over-month drop from April’s 3,635 filings to May’s 2,626 may sound like a turning point. Year-over-year, the decline is eerily similar—27.44% when compared with 3,618 filings from May 2024.

The broader context, however, complicates any interpretation that California is firmly veering away from the edge of a foreclosure crisis. For one, the state has a long history of sharp rises and falls in foreclosure activity. Recall the peak of the 2008–2009 housing crash when filings surged past 695,000 in 2008 and nearly cracked 900,000 in 2009. Following that crisis, pre-foreclosure activity saw a slow but steady decline until the pandemic turned everything upside down again.

In 2023, pre-foreclosures climbed to 95,659—more than double the number from 2022. By the end of 2024, that number had dramatically lowered to 42,879. Now, through just five months of 2025, a modest 9,701 pre-foreclosure filings have been recorded statewide. The trajectory suggests improvement, but also volatility.

The Human Cost Behind the Numbers

For people like Miriam Alvarez, a preschool teacher in San Bernardino, the cold comfort of a declining foreclosure rate feels irrelevant. “I’ve worked steady hours, picked up after-school gigs, and still, I’m behind by three mortgage payments,” she said. The financial foundation of her family began unraveling when her husband lost his warehouse job amid corporate downsizing in early 2024. They applied for mortgage assistance through multiple relief programs, but officials repeatedly told them they didn’t quite qualify.

“This isn’t about irresponsible spending,” she said, holding back tears. “We’re just trying to keep up with everything—groceries, bills, our kids’ school clothes. The mortgage is the last thing that gets paid, and that scares me.”

Miriam’s story isn’t isolated. Across California, low- and moderate-income earners—many of them in service, logistics, and informal labor sectors—remain among the most vulnerable to pre-foreclosure filings. Rising insurance costs, inflation in basic goods, and the return of full mortgage payments after pandemic forbearance programs have compounded vulnerabilities already present in the state’s lopsided housing economy.

Why the Decline Is Happening—and Why It’s Not Enough

One reason for the recent drop in pre-foreclosure filings may lie in the belated but steady recovery of employment across much of the state. California’s unemployment rate has stabilized after peaking at nearly 8.5% in the wake of pandemic-era layoffs. Inflation, while still burdensome, has begun to cool, allowing many families to catch their financial breath. Additionally, policy reforms at the state and federal level—including expanded mortgage forbearance options—have provided brief breathing room for some households.

But policymakers are phasing out those same cushions or stretching them thin. And as more temporary supports expire, struggling homeowners who have managed to keep afloat might soon find themselves slipping below water.

“Too often, we react to foreclosure data as though it’s binary—up means danger, down means everything’s fine,” said Carter Reynolds, a housing policy analyst based in Los Angeles. “But when we talk to actual homeowners, what we find is lingering fragility. They’re hanging on, but just barely.”

Conclusion: Numbers That Whisper, Not Shout

Yes, California’s pre-foreclosure numbers are moving in the right direction. But they’re whispering progress, not shouting it. For tens of thousands of homeowners, one missed paycheck, one medical emergency, or one rent hike could still push them beyond the point of no return.

If the state wants to sustain this decline—and not just celebrate it briefly—it will require more than stabilizing macroeconomic indicators. It will need targeted policies, improved outreach, and above all, compassion.

Behind every point of percentage, behind every filing, is a family just trying to hold onto their home.