Daren Blomquist, SVP of ATTOM Data Solutions, recently wrote in Housing News Report, ATTOM's monthly newsletter of industry news, on the distressed property crisis in areas of the country most affected by foreclosure. Citing the ATTOM Solutions 2016 Year-End Foreclosure Market Report, Blomquist noted that New York properties foreclosed in Q4 2016 have taken an average of 3.5 years to process, and that 31,838 loans actively in foreclosure originated between 2004 and 2008.
Six total New York counties were in the list of top 20 counties with the biggest backlogs of loans from this era. Blomquist spoke to Luana Malavolta, a real estate broker with Exit Reality Search in Bronx, New York, which ranks at number 18 on the list.
“There is less and less inventory coming on the market that is purchasable for mortgage products,” said Malavolta. “I feel it is because the financial institutions do not move fast enough on foreclosures and short sales, letting the properties stay in distress much longer. The longer the property is in distress, the less marketable it is for first time homebuyers utilizing mortgage products.”
Cash buyers are 41 percent of the distressed market, due to the mortgage product users being pushed out. Malavolta mentions these “predatory” cash buyers: “The cash buyer purchases [the property] and barely cleans it and puts it back on the market at a tremendous markup,” Malavolta continued. “Because inventory is so low you have fewer people buying, but at higher prices.”
Looking at ATTOM Data Solutions Year-End 2016 Home Sales Report, Blomquist mentions that in 2016, all-cash buyers made up 41 percent of residential property purchases in New York, well above the national average of 28 percent, and 15.9 percent of all residential property sales were bank-owned, foreclosure auction, or short sales.
Though New York continues to struggle, foreclosures nationally are at a 10-year low. With ATTOM data, Blomquist notes the decrease in foreclosure starts on a year-over-year basis in New Jersey, which had the highest state foreclosure rate in 2016. In addition, New Jersey has the highest property tax rate. According to Rob Lyszczarz, President of RE/MAX Properties Unlimited, high property taxes are making it difficult to liquidate distressed properties and will hinder New Jersey’s home price recovery. Additionally, New Jersey is experiencing some of the slowest appreciation rates in the country, with the media price of $270,000 for a single-family home remaining unchanged between 2015 and 2016.
In New Jersey and elsewhere, long stalled foreclosures are finally starting to be pushed through. Ed Kirn, a foreclosure attorney with Powers Kirn Law Firm, believes that “…it will be the beginning of a recovery period for our housing market. …Urban blight is going to decrease. Zombie properties are going to decrease … it’s better for everybody.”
Read the full article in Housing News Report by Daren Blomquist here. In addition, read Ten-X CMO Rick Sharga's article on Ten-X's online real estate marketplaces.