New Jersey tops the list of states with the highest foreclosure rates

While experts predict that the U.S. may escape a recession this year, the impact of the uncertain economy is taking a toll on property owners, particularly in the realm of foreclosures.

Recent data from ATTOM, a leading curator of land, property, and real estate data, reveals that New Jersey is leading the nation, where one out of every 4,380 homes in the U.S. is facing foreclosure.

In July alone, a total of 31,877 U.S. properties experienced foreclosure filings, encompassing default notices, scheduled auctions, or bank repossessions.

This marked a 5% increase from the same period last year, highlighting the growing challenges faced by homeowners.

New Jersey stands out with one in every 2,335 homes facing foreclosure, placing it among the states with the highest foreclosure rates. The economic uncertainty, coupled with a recent rebound in the housing market due to a shortage of housing, has created a complex landscape for property owners.

“With home prices back up, several factors have combined to put more financial resources in the hands of homeowners, providing more options to avoid foreclosure. However, given that the U.S. housing market remains in flux, the various forces at play could keep the market improving or turn it back downward over the coming months,” explains Rob Barber, CEO at ATTOM.

Foreclosure completions, where lenders repossessed properties through completed foreclosures (REOs), saw a 4% increase in July, totaling 3,332 properties. Illinois led in REOs with 355, followed by Pennsylvania (230), California (217), Michigan (200), and Texas (200).

The rise in foreclosure completions is attributed to the expiration of government interventions aimed at protecting Americans from the effects of Covid-19. After these moratoriums were lifted, foreclosures surged as homeowners struggled to keep up with their payments.

“The foreclosure caseload nationwide doubled after the moratorium was lifted at the end of July 2021 and doubled again last year. That had a lot to do with the backlog that had piled up during the moratorium and the increase in homeowners who had fallen behind on their mortgages during the early stages of the pandemic,” says ATTOM CEO Rob Barber.

The impact of completed foreclosures on the housing market, while notable, is expected to be limited. With approximately 3,000 to 3,300 completed foreclosures per month nationwide, this represents only a fraction of the roughly 63 million residential properties with outstanding mortgages.

ATTOM’s recent report on the zip codes with the highest rates of foreclosure reveals a 28% increase since the second quarter of 2023, totaling 125,000 properties, a 34% increase from the third quarter of 2022. New Jersey, South Carolina, Delaware, Nevada, and Maryland top the list of states with the highest foreclosure rates in the third quarter of 2023.

As foreclosure filings continue to increase, homeowners and the housing market face ongoing challenges.

“It should be a wake-up call to the middle class,” said Lisa McCormick, who says that working families are the victims of a decades-long class war in which few are fighting back. “Institutional housing investors have been buying more single-family homes than ever, in a trend that should worry Americans because corporate landlords are expected to deliver big profits to their shareholders, which often results in evictions, aggressive rent increases while slacking on maintenance and repairs to the units they own.”

Institutional investors in single-family rental housing create a danger of making both homeownership and rental unaffordable, said McCormick, who warned that prospective home buyers have fewer options available on the market when they are forced to compete with mega-wealthy investment funds.

Housing affordability was already a pressing issue in America, where many people are struggling with supply shortages, rising material costs, and stagnant wages before three giant corporations—BlackRock, Vanguard, and State Street—companies that own 88% of the S&P 500, started coming after single-family homes in the United States.

Corporations can secure financing for real estate at costs 30% less than the richest people in the country, said McCormick, who explained that this gives ‘the greedy one percent’ a significant advantage over typical American homebuyers.

The impact is not uniform, with certain areas experiencing higher vulnerabilities than others.

ATTOM’s analysis indicates that New Jersey and Illinois have the highest concentrations of the most at-risk markets in the country, particularly in the New York City, Chicago, and Philadelphia areas.