Connecticut’s Pre-Foreclosure Crisis: Why a Sharp Decline in 2025 Might Not Be What It Seems

A Slow-Motion Housing Emergency

In May 2025, Connecticut recorded just 174 pre-foreclosure filings — a sharp 56% drop from both April of this year and May of last year. On paper, that kind of decline in distressed housing might seem like a rare bright spot in the broader housing affordability crisis. But for many struggling families, it is a lull that feels more like uncertainty than stability.

Behind that decline is not just an improving economy. It’s a complicated, often contradictory web of inflation pressures, pandemic-era policy hangovers, rising home insurance rates, and the brutal arithmetic of housing costs that continue to outpace stagnant incomes in one of the country’s most expensive housing markets.

Over the last two decades, pre-foreclosure rates in Connecticut have played out like a fever chart of the state’s economic health: crashing down after the 2008 recession, then spiking again in the early 2010s as court backlogs cleared. In 2013, the state hit its peak with more than 17,000 pre-foreclosure filings. That figure dropped dramatically in the years that followed, bottoming out at just over 1,000 in 2021.

But that brief breather did not last long.

A Pandemic Reprieve and Its Reversal

For many homeowners in Connecticut, particularly among working-class renters who managed to purchase and enter the housing market in the past decade, the COVID-19 pandemic was both a lifeline and a ticking time bomb. Moratoriums prevented forced evictions and gave struggling families time to recalibrate. But those protections have largely expired, and the numbers in 2022 and 2023 told a clear story: a rebound in distress as families who had delayed payments faced the consequences. Pre-foreclosure filings jumped to 3,801 in 2022 and then to 5,346 in 2023 — a nearly 41% year-over-year increase.

That trend has moderated in 2024, with 4,640 pre-foreclosures statewide by the end of the year. And through May 2025, only 1,431 filings have been recorded — a sharp decline, on pace for the state’s lowest total since 2021.

But the pain hasn’t gone away. “There’s a difference between fewer filings and fewer people struggling,” says Carlos Jiménez, a housing counselor in Hartford. “Right now, people are staying one paycheck ahead of disaster because they’ve sold a car, drained their savings, or moved in with extended family to avoid foreclosure. That’s not stability — that’s survival.”

What the Numbers Say — and Don’t Say

The May 2025 filings mark a stark drop from the 397 pre-foreclosures logged in April, and an even steeper decline from the 401 recorded in May 2024 — a rare case where both the month-over-month and year-over-year metrics show equally dramatic declines of over 56%.

While the raw data may imply a reprieve, experts caution that structural headwinds remain. Inflation has softened somewhat compared to two years ago, but the cumulative impact of higher grocery prices, utilities, and healthcare premiums has left many Connecticut homeowners with little financial margin. The labor market is stable in terms of employment levels, but wage growth in sectors like hospitality and retail — key industries for much of the state’s low-income workforce — has failed to keep up with housing costs.

Complicating matters further is the increasing cost of maintaining a home. “Home insurance premiums, especially in flood-prone areas along the coast, have gone up more than 25% over the past two years,” says Jessica Lee, a real estate attorney in New Haven. “That pushes already-strapped homeowners further toward the edge.”

The Human Toll Behind the Trends

The story of Toni Richardson, a mother of three in Waterbury, mirrors the journey of thousands of Connecticut homeowners. She bought her home in 2017 using a down payment assistance program. Back then, it felt like catching a piece of the American Dream. But in 2023, after losing her job at a local school, she fell two months behind on her mortgage. A forbearance agreement gave her temporary relief, but when that expired in January 2024, she was on the hook for the missed payments plus new interest. “It felt like I was drowning in paperwork and debt,” she says. “Every phone call I got from the bank came with a sense of panic.”

Toni managed to avoid formal foreclosure by negotiating a loan modification in early 2025. But her story is far from over. Rising utility bills, higher property taxes, and the lingering trauma of almost losing her home have made her new financial reality fragile.

“I’m still scared I’m one missed paycheck away from losing it all,” she admits.