Researchers Warn of Foreclosure Backlog in New York, New Jersey
By: Esther Cho
As the housing market recovers from the impact of foreclosures, the New York and northern New Jersey region is still struggling with a growing backlog of foreclosures, according to a blog from the Federal Reserve Bank of New York.
“While the foreclosure rate has been edging down in the nation recently, the opposite is true in New York and northern New Jersey,” Fed researchers Jaison R. Abel and Richard Deitz wrote.
The researchers pointed out that the nation’s foreclosure rate, after rising sharply, has settled to about 4 percent, while the foreclosure rate in New York and New Jersey tends to hover around 8 percent.
Using data from CoreLogic, the researchers noted New York and New Jersey also have the second highest foreclosure rate, falling behind Florida.
According to the researchers, fewer mortgages accumulate into foreclosure inventory on a monthly basis compared to the national average, but more foreclosures have been getting “stuck” in inventory.
On average, properties stay in foreclosure inventory in New York and New Jersey, which are both judicial states, for 503 and 481 days, respectively, while the national average is 381 days, the report found. The figures were based on CoreLogic data from 2010 to 2012.
On the upside, the researchers say recent trends suggest home prices have hit their bottom in the region. However, the growing backlog of foreclosures could become a “drag” on home prices as foreclosures deteriorate and bring down neighboring values.
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