New Jersey’s foreclosure crisis is hitting a peak, and that could be a boon for the state’s housing market.

While bank repossessions across the U.S. fell to an 11-year low in 2017, they reached an 11-year high in New Jersey, according to ATTOM Data Solutions, a housing-research firm. -- https://www.facebook.com/attomdata/?hc_ref=ARSQbe6ageikK3ZqAF55c85wfvnfZmBKtY9NI3rW7PVtKz7fcGKPs4rSxqOTyGJEHlA&fref=nf

New Jersey, along with New York and other states, practice “judicial foreclosure,” in which foreclosures are handled through the court system. The process is typically friendlier to owners who fall behind on payments, but it can take years.

Other states, such as Texas and Michigan, have mainly nonjudicial foreclosures. After the housing bubble burst a decade ago, those states tended to work quickly through their backlog, flooding the market with fresh supply when there were few buyers.

“The pig is now finally at the end of the snake,” said Michael Affuso, director of government relations for the New Jersey Bankers Association. “We had the extraordinary slowness of foreclosures occurring at the judiciary, and that problem has reasonably resolved itself.”

More than a decade after the start of the housing bust, New Jersey leads the nation in overall foreclosure activity, with 1.61% of the state’s homes in foreclosure last year. The number of new bank-owned homes in December jumped to 2,308 from 1,448 in November, according to ATTOM.

The number of bank-owned homes started rising about a year ago, according to an analysis by Jeffrey Otteau, an appraiser and president of Otteau Group Inc. -- https://www.facebook.com/otteaugroup/


The increase in distressed homes for sale is coming as the market is starved for inventory. Homes sold in January were on the market for an average of 72 days, according to data from New Jersey Realtors, a trade group, down from 86 days for the same month in 2017 and 94 days in January 2016.

Housing experts caution the increased pace of foreclosure actions could affect parts of the state differently. Areas where there is already too much inventory—the outer rings of the state and South Jersey, for example—will fall further behind Northern New Jersey and other suburban areas.

Still, the surge in foreclosures is attracting investors looking to buy homes and convert them to rentals.

Christian Schlueter, president of New Jersey Realtors, said bank-owned inventory is increasing for his Toms River-based office. A recent waterfront bank-owned home, he said, attracted eight offers in three days and went into contract for more than the asking price. The home will have to be completely gutted, he said.

“There’s a lot of experienced investors who are buying [bank-owned homes] and some new people are buying them believing they are going to be investors,” he said.

Howard Banker, director of housing finance at New Jersey Community Capital, a nonprofit community development organization, said he is seeing many distressed homes being converted to rentals. There is a growing market of displaced lower- and middle-income former homeowners who are unable to get another mortgage, he said.

“Investment firms have been able to acquire these homes in bulk and therefore at a discount. It is a lovely cash-flow system,” he said.

https://www.wsj.com/articles/why-new-jerseys-soaring-foreclosures-are-good-for-the-housing-market-1520082000

"The story is that people are moving to these markets, and they're experiencing rapid home price appreciation," said Daren Blomquist, senior vice president at ATTOM.

"It doesn't just affect the people who are willing to pay for the homes and the property taxes," he said. "There is a ripple effect on neighbors who might have been there for 20 years, and their taxes go up as well."

For Keren Vered, a Jersey City resident, community activist and fashion industry consultant, the $18,000 tax hike on her townhouse translates to an additional outlay of about $1,500 a month.

That's on top of the $10,000 she already paid annually in property taxes prior to the city's reassessment. Then there are other regular monthly costs she'll need to weigh.

https://www.cnbc.com/2018/03/02/your-property-taxes-just-jumped-by-more-than-50-percent-now-what.html?__source=sharebar|facebook&par=sharebar

As a landlord and a small business, if you become a pass-through entity — an LLC or an S-corporation — you may be eligible for a 20 percent deduction for qualified business income.

If you rent out your home, be sure to track your expenses and talk to your insurance agent. "If you use it as a rental property, even partially, your insurance coverage needs will change," said Smith.

Report your rental income or loss on Schedule E when you file your taxes.

On the other hand, if your rapidly appreciating property is in a prime destination, consider that you won't have to claim the rental income if you rent your space for less than 14 days over the year.

Fight back
Finally, if you disagree with your municipality's assessment on your home, you can contest the findings.

Get to know your city's appeal's process, which can be deadline sensitive and will vary from one town to the next.

Expect to gather evidence of your home's market value, too.

You can hire an appraiser to provide your city's tax assessor with reports and comparable property values to back up your findings, said Brigid D'Souza, a CPA and founder of Civic Parent, a website that follows property tax developments in Jersey City.

The national average cost of hiring an appraiser is about $329, according to HomeAdvisor, a home improvement website.
Comparables are best if you can say that this home is assessed at what yours should be, and you have similar square footage and features," said Steffen. "But be careful: They could raise your neighbor's taxes."