Sandy-Ravaged New Jersey Leading Foreclosure Gains
Foreclosure filings surged in New Jersey, New York and Connecticut last month, even before those three states bore the brunt of Hurricane Sandy that now has homeowners digging through the debris.
Default, auction and repossession notices increased 140% in New Jersey, 123% in New York and 41% in Connecticut from a year earlier, the biggest annual gains among U.S. states in October, RealtyTrac Inc. said today in a report. Foreclosed properties in counties affected by the storm were valued at $41 billion, the company said.
Sandy killed at least 177 people in the Eastern U.S. and Caribbean, ravaging beachfront communities, and left more than 8 million homes and businesses in the cold without power for days. Subways and tunnels in Manhattan were flooded and stock exchanges shut down. Insured damages may swell to as much as $20 billion, according to Eqecat Inc., a provider of catastrophic- risk models.
"There will be a huge increase in delinquency because of job loss," Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, a homeowner counseling agency based in Newark, said in a phone interview. "There are whole towns where businesses have been wiped out, and people worked in those businesses."
Lou Forst and Suzanne Gambert, a Newark police sergeant and small-business owner who are both longtime residents of the New Jersey city, own a house in Forked River that was heavily damaged by the storm. Two feet of mud covered the inside of the three-bedroom ranch-style home, built on a concrete slab close to Barnegat Harbor, Forst said.
"It was completely flooded and we lost all our furniture and appliances, the kitchen and bathrooms we had just redone," Forst, an instructor in Newark's police academy, said in a telephone interview. "Black mud and silt were everywhere. It smelled like sewage and a fish market."
The couple had purchased the home in April 2011, realizing a decade-old dream. They paid $437,000 in a short sale, in which the bank sells for less than the amount owed on the mortgage, and spent at least $50,000 on renovations and furnishings, coming down from Newark on weekends to do the work themselves, Forst said.
Residences accounted for about 55% of the insured real estate damaged by Sandy, according to Eqecat, which estimated total economic losses of as much as $50 billion. About 34% of the property losses occurred in New York, 30% in New Jersey, 20% in Pennsylvania and the remainder in other states, Eqecat said Nov. 1.
New Jersey home prices were the third-worst performing among U.S. states in September, down 1.8% from the previous month, according to Irvine, Calif.-based CoreLogic Inc.'s index of residential values. That compares with a drop of 0.3% nationwide.
Delinquency rates will spike in the wake of Sandy, a "big negative" as the state struggles with defaults and record unemployment, Deutsche Bank AG said Nov. 7.
While Sandy's impact on home prices in the region probably will be modest, it probably will delay the housing recovery in New York and New Jersey, the Deutsche Bank report said. The effect on delinquency rates may be temporary, with homeowners unable to do "simple stuff such as access the Internet to pay monthly bills," said Steven Abrahams, a New York-based mortgage analyst for Deutsche Bank.