New York Foreclosures Rates are Lower than Other States
New York foreclosures have slowed over the last several months and are now occurring at a slower rate than several other states. Only one New York home in 3,795 received a foreclosure filing in April 2011. One of the reasons for this situation is that the New York judiciary has instituted a much more rigorous process for banks to follow.
For example, lawyers for the lenders will need to verify the details of the foreclosure actions and personally sign off on the accuracy of the records. All of this led to an average 900-day period between a foreclosure notice and the actual foreclosures in New York, but with the much sterner rules in place, the length of the process appears to be on the verge of decreasing
These delays have had the effect of keeping many distressed properties off the market, which has had the further effect of taking some pressure off prices for normal home sales. Some people have suggested the suspected backlog of shadow inventory will take several years to work out of the system.
New York foreclosures have also been affected by the unemployment rate, as have foreclosures in the rest of the country. The most recent rate is 8.0%, almost one full percentage point lower than the national rate. After a steep climb from the beginning of 2008 to early 2009, the New York unemployment rate has moved up and down, ranging from 7.8% to 9.6% for more than a year.
This economic downturn has been somewhat different from earlier business cycles in which New York has had higher unemployment than the national average. This time, the rate for New York has been consistently below the national rate. In addition, the unemployment rate in New York City is higher than the rate in the remainder of the state.
Foreclosures have increased over the last month in several cities in New York:
- Brooklyn foreclosures increased by 18.66%. The average price for foreclosed homes is $399,000.
- Buffalo foreclosures increased by 9.81%. The average price for a foreclosed home in Erie County is $104,800.
- Staten Island foreclosures increased by 10.16% with 1 home in 2,503 receiving a foreclosure filing in April, 2011.
At the same time, foreclosures have decreased during the last month in several other New York Cities:
- Bronx foreclosures fell by 24.42%
- Jamaica foreclosures fell by 35.79% with an average price for a foreclosed home is $244,000.
- Schenectady foreclosures fell by 15.4% with one home in 17,000 receiving a foreclosure filing in April 2011.
In other issues that will affect the housing market and New York foreclosures, the state government has enacted a budget that begins to address the problems related to the budget shortfall. However, key campaign promise of Governor Cuomo – to limit real estate property tax increases to 2% – was not included in the final budget package.
In addition, there is upward pressure on local municipal budgets because of capped state support for education and Medicaid. This could result in higher local taxes, making it marginally more difficult to sell a home and to avoid foreclosure.
A further element of state finances that could influence housing is the extension of the rent control laws. Any move to increase rents could push some renters from renting into purchasing a home, and therefore supporting the housing market.
New York banking regulators have expressed concern that there remains an overhang of potentially distressed homes, which could have a negative effect in the coming year or two.
New York foreclosures are not as widespread as they are in other states, which have a much larger percentage of homes that are vacant, in foreclosure or underwater.
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