No. 2 in 2022: NJ foreclosures rank high, approach pre-COVID rate
Looking at the first half of 2022 versus the first half of 2020, the number of United States properties with active foreclosure filings fell just 1%, according to a midyear report released Tuesday by ATTOM Data Solutions.
But it is worth noting that it was as the second quarter dawned two years ago that the COVID-19 pandemic ushered in a series of moratoriums at both the federal and state levels, from which statistics have not yet fully normalized.
Rick Sharga, ATTOM executive vice president of market intelligence, said the bounceback has actually gone more slowly than he would have anticipated — and that's even considering that the national first-half pace has quickened 153% from 2021.
Things are still comparatively sluggish in New Jersey, Sharga said, despite only Illinois ranking higher than the Garden State's rate of 0.24% of housing units in foreclosure.
That number is "artificially" low, according to Sharga, because states where rates were elevated pre-COVID remain so now, and a lot of that has to do with how the sales themselves are carried out.
"In cases like New Jersey and Pennsylvania that do judicial foreclosures, that really has slowed down the rate of foreclosure activity," Sharga said, citing a court backlog that still has not cleared, and adding that "in New Jersey, you do foreclosures through a sheriff's sale, and in a lot of cases sheriffs were uncomfortable actually executing those foreclosures."
Sharga said it stands to reason that if new COVID waves and variants further impact court proceeding formats, delays could persist.
Adding to that, the time it takes to complete a foreclosure proceeding in New Jersey has always been longer than most other states, now stretching to nearly 2,000 days on average as of the end of the 2nd quarter, the third-longest timeframe in the country.
So, Sharga cautioned taking the Garden State stats with a grain of salt.
"Even though states like New Jersey and Delaware have had higher than average returns of foreclosure activity, we're still looking at foreclosure levels that are probably 40% of what they were," he said. "The good news is that we're not seeing a lot of foreclosure activity from new loans, and a lot of the activity in the pipeline right now is from loans that were already in trouble."
The best barometer, according to Sharga, is to watch what's going on in your local market. If unemployment is high, home prices have remained stagnant, and the population is eroding, foreclosure activity will likely be on the rise.
And in Q2, that was at least the case in Atlantic City and Trenton, both top 10 in the U.S. according to ATTOM.