Foreclosures continue to fall nationwide, but not in New Jersey. Markets all over are working through their distressed properties so they can return to normal, but not in New Jersey … not quite yet.
Real estate professionals with expertise in dealing with distressed properties said banks are still slow to put houses on the market locally — perhaps waiting for an increase in prices to reduce their losses.
But a jump in local and state foreclosures in the second quarter suggests the long-awaited resolution of distressed properties — delayed by the N.J. Supreme Court moratorium — is finally about to start in earnest.
“For the most part, we are not seeing any of that shadow inventory (distressed properties withheld from the market). I don’t see them releasing that,” said Hader Rivas, an agent with Re/Max Atlantic in Northfield and a certified distressed-property expert. “I think the banks are holding out for a rebound in property values.”
Rivas, 33, of Galloway Township, said he expects the houses to reach the market “little by little.” Meanwhile, some local markets lack enough inventory to satisfy buyer interest.
Rick Cammarano, a broker associate with Century 21 Alliance Wildwood Crest, said that while there have been some developments regarding distressed properties, more houses reaching the market still isn’t one of them.
“A lot of the banks aren’t unloading these properties yet. Everybody is trying to figure out what they’re waiting for,” said Cammarano, 56, of North Cape May.
He said even many properties listed for foreclosure sales haven’t really been available.
“Every time the scheduled sale nears, they’re postponed, and the date keeps going further and further back,” Cammarano said.
He said Bank of America is selling a number of loans to asset management companies and “probably will start to release some of (the bank-owned properties) once that’s all done.”
The picture nationwide — especially in the half of states where foreclosures aren’t required to be a court proceeding and haven’t been delayed by judicial rulings — is quite different.
In this first half of this year, U.S. foreclosure filings dropped 19 percent from the prior six months and were down 23 percent from the first half of 2012, according to RealtyTrac, the Irvine, Calif.-based provider of foreclosure market information.
In New Jersey, however, foreclosures jumped 60 percent from the first half of 2012 and were 3 percent higher than the already elevating filings in the second half of last year.
Atlantic County’s 827 foreclosures through June 30 were a 72 percent increase from the prior year period; Cape May County’s 265 listings, a 39 percent increase; and Cumberland County’s 335, a 35 percent increase.
Likewise, bank repossessions in June decreased from the year before in 34 states but increased 33 percent in New Jersey.
And in one of the best measures of a dysfunctional court-led foreclosure processing system, New Jersey has now tied for first place with perennial leader New York.
The average time to foreclose in both states in the second quarter was 1,033 days — almost three years. New Jersey caught up with New York by increasing its processing time another 3 percent, while its neighbor shaved 2 percent off its average foreclosure duration.
Nationwide, the average foreclosure takes 526 days.
“Halfway through 2013, it is becoming increasingly evident that while foreclosures are no longer a problem nationally, they continue to be a thorn in the side of several state and local markets, particularly where a backlog of delayed distress has built up thanks to a lengthy foreclosure process,” Daren Blomquist, RealtyTrac vice president, said in a statement.
Cammarano said the seemingly endless foreclosure crisis in New Jersey has resulted in a lot of damaged housing and squatters living rent-free.
“I went by one today right in my neighborhood and noticed the back of the house has a blue tarp on it, which means the roof leaks,” he said. “Now there’s water in the house, in the summer heat, so you have mold, and it just gets worse.”
He said banks that finally foreclose on houses in which people are living without paying for mortgage or rent often offer the squatters cash to leave instead of going through New Jersey’s difficult eviction process.
“They’ve been living in there a few years without paying a dime. Nobody’s checking on them,” he said.
Cammarano and Rivas both said they and their offices are doing a strong business in the regular home market, with a lot of buyers looking now.
“Buyers are coming off the fence because interest rates are increasing,” Rivas said. “If a property is in good condition, buyers are bidding against each other.”
John Adger, chief economist for RealtyTrac, said New Jersey has been one of the strongest markets (along with New York) for property flippers — who buy and resell within six months — in the first half of 2013.
In New Jersey, 3,457 single-family houses were flipped this year as of June 30, nearly four times the number in the same period in 2012, Adger said.
He said that pace of flipping is unlikely to last, since more investors are entering the market and the average profit for flipping a U.S. house this year of 9 percent will likely fall.
Foreclosures in New Jersey and regional counties have gained momentum this year, perhaps indicating that the drag of distressed properties on the housing market and economy will start to be addressed.
Second quarter foreclosures were up 35 percent from the first quarter in Atlantic County, up 45 percent in Cape May and 52 percent in Cumberland counties, and 22 percent higher in New Jersey as a whole.
When the housing bubble collapsed, no one imagined it would take government and the banks seven years or more to end the foreclosure crisis.
“I thought for sure by now we’d have this whole mess resolved, but the fact is they haven’t, and a lot of properties are sitting around vacant,” Cammarano said.
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