After more than a year of relative calm due to the review of lenders practices, the wheels of attrition in the hosing market are beginning to turn again. As many as 1.25 million of America’s abandoned or neglected homes are headed for sheriffs’ sales and auctions.
“Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.”
Even though New Jersey law allows municipal appraisers to disqualify these homes when it comes to a tax appeal, the flood of distressed sales has an effect on the market and on the value of all houses. Homeowners who are still holding on to their properties are the losers in this picture.
Simultaneously, lenders may begin to move faster to foreclose on delinquent homeowners. Since the delinquent homeowner is typically one who has little money, those houses have for the most part been neglected too. Occupants may resort to short-cuts or temporary repairs when problems arise or do nothing at all. Some homeowners, feeling victimized by the banking system, have actually vandalized their own homes prior to eviction.
“The best measure of the influence foreclosures have on the broader market is the 20-city S&P/Case-Shiller home-price index that tracks deeds, including homes sold directly by banks and deals that don’t use mortgages, said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. The index probably will fall 5 percent to 10 percent this year, a range that depends on the condition of the mothballed homes, he said. ”
Some of the abandoned homes are in such a state of dilapidation that they may have to be bulldozed.
Although the situation involves the entire country, New Jersey may be affected more than average due to the fact that unemployment is the highest in the Northeast (with the exception of Rhode Island) and property taxes are the highest in the nation and can certainly add to the misery of homeowners almost the same as if they had a second mortgage.
My proposal of abolishing property taxes for primary residences of New Jersey taxpayers would have a soothing effect on the housing crisis. People would truly own their homes after their mortgages are paid off. But for that to occur, I have to be elected governor first and that, if you decide that it will happen, will not be until the end of 2013. For some homeowners, it will be too late.
The current administration of governor Christie has little sympathy for property tax relief. We already know that his 2% property tax cap is full of loopholes. The democrats in the Legislature have proposed a modest property tax cut but it would not be sufficient to reverse the tide of bad news. New Jersey needs shock therapy; bold measures, and these will not come from either political party. They are just too comfortable with the status quo and basically don’t care.