South Carolina Pre-Foreclosure Rates Show Signs of Stress Amid Economic Uncertainty

A Slow Unraveling: How Inflation and Rising Costs Are Catching Up With South Carolina Homeowners

At a glance, the recent figures for pre-foreclosure filings in South Carolina point to a mixed bag. September 2024 recorded 616 residential properties entering pre-foreclosure—a 9.22% increase from the previous month but marking a steep 36.82% decline compared to the same time last year. While at first blush this year-over-year dip might suggest improvement, the lived reality for many homeowners tells a more complicated—and more painful—story.

In recent weeks, dozens of South Carolina families—many of them first-time buyers who purchased at the height of pandemic-driven demand—have quietly slipped into pre-foreclosure. Some are one or two missed payments away from legal action. In some cases, all it takes is a car breaking down, a utilities bill spiking from a brutal summer, or a spike in grocery prices to throw off a household that was already budgeting for a mortgage to the penny.

“I did everything right,” says Angela M., a teacher’s aide in Columbia who bought her home in 2019. “I had a fixed-rate mortgage, I didn’t overextend. But the cost of everything else—insurance, taxes, food—just didn’t stay stagnant like my paychecks.”

Angela is one of the 616 cases logged in September, and while the number might be smaller than the 975 recorded in the same month last year, she doesn’t feel any less alone.

An Uptick From Last Month, and Warning Signs Ahead

The number of pre-foreclosure in September represents a 9.22% increase over August’s total of 564 homes—indicating that financial pressures are, again, gaining steam after what seemed like stabilized or even improving conditions earlier this year.

This recent increase aligns with broader national concerns over persistently elevated inflation, rising consumer debt, and sluggish wage growth. While the job market remains tight on paper, the kind of employment that’s available isn’t necessarily helping families keep pace with costs. Increases in healthcare expenses, property insurance premiums, and food prices continue to outpace income growth for many households across the state.

The Long Arc of the Foreclosure Crisis: 2005 to 2024

To understand what’s really happening in South Carolina today, it’s instructive to look back.

In 2005, well before most people had even heard of subprime loans, South Carolina recorded just 397 pre-foreclosures for the year. Then came the housing bust. By 2009, the total had surged past 21,000. In 2013, the state hit its high-water mark: 41,360 properties were in pre-foreclosure that year, a staggering figure for a state with fewer than five million residents at the time.

What followed was a slow but mostly consistent decline. By 2021, pre-foreclosure filings had dropped to just 2,841. This is a direct result of pandemic-era foreclosure moratoriums and government intervention, including forbearance programs designed to keep people in their homes even as unemployment spiked.

But those policies were always temporary. Since then, South Carolina has seen a modest but persistent rebound in distress filings. In 2022, the number jumped to 9,711 and climbed again in 2023 to 11,228. Through September of this year, 5,819 properties have already entered pre-foreclosure—putting the state roughly on pace with—if not slightly below—last year’s total.

The Crisis Is Slower This Time, But It’s Still a Crisis

Unlike 2008, when risky loan products and investment speculation were the catalysts of collapse, today’s housing stress is more insidious, more dispersed. Lending standards are tighter, and home equity is stronger. But none of that helps when a modest-income family is forced to choose between making a mortgage payment or buying insulin.

For working-class families—especially Black and Latino homeowners historically locked out of the affordable credit markets—rising pre-foreclosure numbers signal a new kind of housing instability, one that’s driven not by bad loans but by bad math: earnings are flat, costs are up, and the margin for error has vanished.

Delores W., a 67-year-old grandmother of four, lives in Florence with her disabled husband. They’ve owned their house since 2002, and paid it off in 2020. But property tax reassessments and surging home insurance premiums have added nearly $300 a month to their housing costs, and now she’s missed two payments in a row on a reverse mortgage she took out just to stay afloat.

“We thought the house would be our cushion,” Delores says. “Now I worry the bank’s going to come take it.”