In the second quarter of 2012, New Jersey properties that banks had already foreclosed took 354 days (nearly 1 year!) to sell from when they were foreclosed upon. This was the third longest period of time in the US — The US average was 195 days and the only two states with a higher number of days for the sale of these properties to close were New York (430 days) and Arkansas (357 days).
In the second quarter of 2012, New Jersey properties that sold while in the foreclosure process (i.e., after the bank filed a foreclosure notice, but before the bank actually foreclosed on the property) took 753 days (over 2 years!) — the US average was 319 days and the only state with a higher number of days for the sale of these properties was New York (788 days).
The effect of these numbers on the New Jersey residential real estate market is that those properties that are either bank-owned or in the foreclosure process which are not on the market are properties that will be competing with non-distress-sale properties for the buyers when they eventually come on the market. These properties are often priced lower than non-distress-sale properties so that they appeal to buyers. (From a buyer’s perspective, these properties must be offered at a discount relative to comparable non-distress-sale properties because of the added burdens to the buyer of administrative process during the sale (i.e., bank approval) and condition issues typical of distress-sale properties). When those properties close, they could be considered by appraisers when evaluating the value of a non-distress-sale property under contract and waiting to close, thereby having a negative impact on the value of other comparable. The good news for those of us in the Tewksbury/Mendham/Somserset Hills area is that there is a relatively-low percentage of bank-owned and pre-foreclosure properties in our area (see www.realtytrac.com)
Source of foreclosure data: Standard & Poor’s HousingView 7/13/12