National Association of Realtors to Predict Stalled-Out Existing Home Sales Market Today -- and New Jersey Will Be No Exception

Major home foreclosure indicator -- New Jersey lis pendens filings -- jumps 44% from year-ago quarter, and 71% in year-ago September comparison. Upcoming mortgage rate "resets" could make the foreclosure situation worse.

Fairlawn, NJ (PRWEB) October 25, 2006 -- As sales of existing homes continue to fall to a two year low, according to figures scheduled to be released by the National Association of Realtors today, another New Jersey housing market statistic appears poised for a rise: Foreclosures.

According to statistics compiled by the state's leading real estate foreclosure data service, SheriffSalesOnline.com -- http://sheriffsalesonline.com -- the number of lis pendens filed in the state of New Jersey has risen from 967 in September of 2005 to 1649 in September of 2006 – a breathtaking rise of 71%.

And a year-to-year third quarter comparison for the state of New Jersey reveals an equally dramatic increase of 44% -- from 2486 New Jersey lis pendens filed in the third quarter of 2005, to 3577 filed in the third quarter of 2006.

"Lis pendens court filings are the first legal step taken in the home foreclosure process that indicate a homeowner is behind in his or her payments and headed for foreclosure," says Jeffrey Posner, president of the Fairlawn-based SheriffSalesOnline.com, which provides comprehensive and timely advance notice of such troubled properties in the Lis Pendens, Public Notice and Sheriff List stages to his subscribers. http://sheriffsalesonline.com "They are a recorded legal documents filed with local courts that give notice to the public that an action affecting a particular piece of property has been filed. They are in the nature of a 'quasi lien."

A house in a lis pendens proceeding means it is about eight or nine months away from being sold in a sheriff's sale, says Posner.

The increase in lis pendens activity throughout the state is only one indication of a stalled out housing market, Posner adds.

A monthly housing market study to be released today by the National Association of Realtors is likely to show that sales of previously owned homes fell nationwide to an annual rate of 6.21 million in September, down 1.4 percent from August and the fewest in more than two years. And tomorrow, the Commerce Department is expected to report that sales of new homes fell to an annual rate of 1.045 million, from 1.05 million in August. New-home sales reached a three-year low of 1.01 million in July.

In the Northeast, according to the National Association of Realtors, home prices in the second quarter of 2006 were down 16.3 percent from last year. In New Jersey specifically, second-quarter prices were down 11.6 percent.

Fueling the foreclosure boom is the fact that more than $200 billion worth of adjustable rate mortgages will "reset" at higher rates in 2006 and over $1 trillion will reset in 2007, says Posner. "This situation, with monthly payments for many of these homes zooming to an unaffordable level, may edge more homeowners into the foreclosure process both in New Jersey and nationwide," says Posner. In terms of personal finance, more borrowers are finding it harder to meet interest payments following 17 interest-rate increases by the Federal Reserve since mid-2004.

And about 18 percent of all mortgages issued in the first half of the year were to borrowers considered most likely to default, such as those with high credit-card balances, up from 2.4 percent in 1998, based on data from the Mortgage Bankers Association. "Many of these high-risk mortgages will end up in foreclosure," says Posner.

Nationwide, the percentage of home-loan payments more than 60 days delinquent rose to 7.23 percent in July from 5.9 percent a year earlier, the fastest rate of increase since 1998, Moody's Investors Service said earlier this month. Meanwhile, with 3.92 million homes currently for sale nationwide, the National Association of Realtors says the current inventory is at a 13-year high.

The trade group on Oct. 11 estimated that the median price of a new U.S. home probably will drop 0.2 percent to $240,500 nationwide. "That's the first time in 15 years that home prices will have fallen," says Posner. Sales of new and existing homes probably will drop 9.4 percent to 6.76 million in 2006 from a record last year, according to another housing industry group, Freddie Mac.

The drop in prices may be a temporary opportunity for New Jersey bargain hunting home-buyers – whether through the foreclosure process or through their local realtor, says Posner. Prices are expected to begin to rise again in the first quarter of 2007, but at a modest rate of about 1.6 percent nationwide. "But with the supply of available homes at its highest level since April 1993, now is a good time to buy a home, especially for bargain hunting first-time buyers," he says.

"There is a nice window of opportunity here, especially in the foreclosure market, where distressed properties and the auction process can cause homes to sell for many thousands of dollars below their true market value."

A recent Wall Street Journal report notes that mortgage lenders are making it easier to get loans despite the cooling real estate market. That, along with more favorable mortgage interest rates averaging 6.4 percent will allow potential homeowners to spend less money purchasing a home than they would have last year.

Nationwide, according to one report, foreclosure activity in September 2006 showed an estimated 103,000 properties entering some stage of the foreclosure process during the 30-day period. Five states -- Florida, California, Michigan, Texas and Colorado -- accounted for an estimated 66 percent of September's foreclosure filing action.

September figures, along with figures from July and August, show one new property entering some stage of the foreclosure process for every 1,122 U.S. households, up 14 percent compared to the second quarter of 2006.

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