- Short sales nationwide have been rising again since 2023.
- Ten “hot spots” where home sellers are underwater identified
- Utah not on the list, but there are concerns
When the global economy all but collapsed nearly two decades ago, many Americans soon found themselves forced to sell their homes for less than they owed on their mortgage to avoid foreclosure.
The number of what’s known as short sales jumped when the Great Recession hit in 2008 and continued to climb, finally peaking in 2012 when the transaction made up 9% of the nation’s housing market, according to Realtor.com.
A new report by the National Association of Realtors website found that in 2025, the share of short sales represented 0.6% of all conventional closings and 28% of distressed home sales, with fewer than 30,000 total.
But short sales have been increasing recently, rising 4% from 2023 to 2024, and 10% between 2024 and 2025, the site said, noting that in the past four months, those transactions went up 16%.
“Today, short sales are a small corner of the market, but a growing one,” Glen Morgenstern, a Realtor.com economist intern and author of the report, said, part of what he called a broader rise in all types of distressed sales now that COVID-19 pandemic assistance is gone.
What are the hot spots for short sales?
The report identified the 10 midsized and mid-priced U.S. housing markets with the highest concentration of short-sale homes for sale in May. Here are the markets labeled the nation’s “Short Sale Hot Spots” with the percentage of short sale listings.
- Lakeland, Florida, 6.7%
- Colorado Springs, Colorado, 5.8%
- Putnam, Connecticut, 5.6%
- Pueblo, Colorado, 5.2%
- Vallejo, California, 4.5%
- Shelton, Wyoming, 4.1%
- Olympia, Washington, 3.9%
- Yuba City, California, 3.8%
- Waterbury, Connecticut, 3.7%
- Battle Creek, Michigan, 3.6%
Are Utah homeowners in danger of being underwater?
Utah may not have made the list, but there still may be cause for concern. What’s described as the Salt Lake City-Murray metropolitan area had a 1.8% share of short sale transactions in 2025, according to the report, up 12.2% from 2024.
The Salt Lake City-Murray metro “has a high and growing share of transactions that come from short sales,” Realtor.com Senior Economist Joel Berner told the Deseret News Friday.
“The surge of purchases in SLC in recent years and the more recent retreat of home prices there put some recent buyers in danger of being underwater (owing more on their loan than their home is worth),” Berner said. “This is a scenario that often leads to short sales.”
Utah also has the nation’s highest short-sale-to-foreclosure ratio, about 3.3 short sales every every foreclosure sale, Morgenstern said, adding that only Idaho’s ratio comes close, at 2.9. Most states, he said, had a ratio below 1.
“What has changed recently in Salt Lake City is the pace. Homes take about a third longer to sell than three years ago, and inventory is higher,” Morgenstern said. “In a fast market, an owner in trouble simply sells and moves on.”
But, he said, " as the market slows, the buyers who stretched the most, those who bought near the 2022 peak with little money down, have the least cushion to absorb selling costs, and some of them end up short."
‘They overpaid for their homes’
What the “hot spots” markets have in common is a rapid rise in prices after 2020 amid the nation’s pandemic home buying frenzy, and then a decline in demand as inventories soared. In Lakeland, the number of homes for sale shot up 60% over three years.
With prices remaining stagnant or even dropping, “that is enough to leave owners who bought near the peak owing more than the home is now worth, the precondition for a short sale,” Morgenstern said.
The hot spots highlighted all “skew toward short sales, not just distress in general,” he said. “In May, Lakeland had about three and a half short sales for every foreclosure listing, Pueblo roughly six to one, and Putnam, a small market, had eight short-sale listings and no foreclosures at all.”
Brian Stephens, a Lakeland real estate agent, told Realtor.com that home prices in the Central Florida city have stalled over the past two years even as insurance rates and homeowners fees in the state are going up much faster than other parts of the country.
About one out of every seven homes for sale in the U.S. is in Florida, according to recent analysis by Parcl Labs that also found nearly 45% of listings in that state have taken a price cut, with 1 in 10 homes selling for less than the owner paid.
In Lakeland, homeowners who bought in 2021 through 2023 account for “most of the people in trouble,” Stephens said.
“They overpaid for their homes,” he said, “because there were multiple offers flying around, buyers waiving appraisals, and a frenzy of buyers grabbing the low interest rates that were offered at the time.”