New Jersey Wins!

Image00001 New Jersey Wins!A shadow supply of millions of bank-owned and potentially foreclosed homes lurks over the residential
market, threatening to depress values even further and delay recovery. The U.S. had 1.8 million distressed homes in January that had yet to be listed for sale, a “shadow inventory” that is expected to weigh on home prices for years.

Mortgage modifications likely helped whittle the shadow supply from 2 million last year. But, despite widespread efforts to help troubled home owners stay in their homes, it seems the shadow market isn’t getting lightened up anytime soon.

Conditions vary widely from state to state. The states with the largest supply of distressed properties (measured in months it would take to sell them) are New Jersey, Illinois, Maryland, Florida, Delaware, Georgia, Connecticut, Alabama, California, Washington, and Michigan.

Those states all exceed the national average of nine months’ supply of distressed properties that aren’t yet for sale.

At the other end of the scale, Mountain or Plains states such as North Dakota, Texas, and Wyoming are in the best shape.

According to the National Association of Realtors, New Jersey’s percentage of distressed properties to overall home sales (20%) has been less than that of many other states (30-70%). However, the reason for this is the New Jersey court system has prevented banks from foreclosing on many homes for over a year. During that time, the months’ supply of ‘shadow inventory’ of distressed properties waiting to
come to market in New Jersey has climbed to over 50 months, the largest number in the country.

In October, New Jersey had the 24th highest foreclosure rate in the country, with servicers filing roughly 5,200 foreclosures that month, according to RealtyTrac. By July, the Garden State’s foreclosure rate dropped to 42nd with just 1,112 filings last month.

New Jersey serves as an example for many states that will see a dramatic increase in the number of distressed properties coming to the market in the fourth quarter of 2011 and the first quarter of 2012.

Sources:

http://economistsoutlook.blogs.realtor.org/2011/03/21/state-by-state-estimate-of-shadow-inventory/

http://www.usatoday.com/money/economy/housing/2011-03-30-distressed-homes-shadow-
inventory.htm

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