By Linda O’Flanagan
If it weren’t for the glut of foreclosed properties, you’d need a fireman to put out the red hot recovery in New York’s apartment market.
Latest numbers show New York and New Jersey top the nation in inventory of foreclosed properties still to be sold.
“Distressed inventory competes with non-distressed inventory, dampening the rate of housing price recovery in markets with the heaviest concentrations of distressed real estate,ˮ said appraiser Jonathan Miller, president of Miller Samuel.
“It likely makes lenders more averse to lending in these markets for fear of greater exposure.ˮ
According to analysts at property information firm CoreLogic, as the national housing market continues to recover, the foreclosure inventory is declining quickly.
“It’s down by 32 percent from a year ago,ˮ said Mark Fleming, chief economist for CoreLogic. “Continued strength in the housing market will contribute to our outlook for ongoing improvement in the stock of distressed assets through the end of this year.”
According to CoreLogic, there were 49,000 completed foreclosures in the U.S. in July 2013, down from 65,000 in July 2012, a year-over-year decrease of 25 percent. On a month-over-month basis, completed foreclosures decreased 8.6 percent from the 53,000* reported in June.
Before the housing market crash in 2007, completed foreclosures averaged 21,000 per month nationwide. Since the financial crisis began in September 2007, 4.5 million people have lost their homes to foreclosure.
Anand Nallathambi, president and CEO of CoreLogic, said, “Completed foreclosures and delinquency rates continued their rapid descent in July. Every state posted a year-over-year decline in foreclosures and serious delinquencies fell to the lowest level since December 2008.”
The five states with the highest number of completed foreclosures for the 12 months ending in July 2013 were: Florida (110,000),California (65,000), Michigan (61,000), Texas (45,000) and Georgia (41,000).
These five states account for almost half of all completed foreclosures nationally.
The five states with the lowest number of completed foreclosures for the 12 months ending in July 2013 were: District of Columbia (141), North Dakota (484), West Virginia (505), Hawaii (512) and Maine (754).
The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (8.1 percent), New Jersey (5.9 percent), New York (4.7 percent), Connecticut (4.0 percent) and Maine (4.0 percent).
The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.4 percent), Alaska (0.6 percent), North Dakota (0.7 percent), Nebraska (0.7 percent) and Colorado (0.8 percent).
“Since the foreclosure crisis began, New York and New Jersey have been the slowest in the US to handle the excess supply of distressed property,ˮ explained Jonathan Miller.
“As judicial states, when someone stops paying their mortgage, it takes an average of three years for the lender to be able to begin to obtain control of the asset to sell it and recoup some of their loss.ˮ
Despite the backlog of foreclosures, experts have dismissed fears this will stifle recovery.
With the number of homes for sale in New York far behind demand, Emmett Laffey, CEO of Laffey Fine Homes, told REW last month, “The eventual release of these [foreclosed] properties will be welcome in the market. Buyer appetite for foreclosed properties is at an all-time high. Investors will continue to swarm at below market deals.”
