While New York City’s suburbs have been spared the astronomical foreclosure rates that have hammered the rest of the country, some of the counties surrounding the five boroughs have seen serious spikes in the last year, changing the real estate landscape for both buyers and sellers.
In fact, Westchester Country — one of the wealthiest counties in the tri-state area and home to high-profile residents like Bill and Hillary Clinton — recorded one of the biggest foreclosure increases in the region. Well-to-do Fairfield County, Conn., saw a significant jump as well.
While those counties didn’t have as many actual homes in foreclosure as some of the other counties in the area, they led the pack in foreclosure increases. Between July 2007 and July 2008 (the most recent data on record), Westchester saw a 45 percent jump.
In 2007, there were 232 homes there going into foreclosure; a year later, there were 336 homes in foreclosure, according to
RealtyTrac.com.
Those who follow real estate in Westchester say the spike is connected to the many adjustable-rate mortgages that were issued to buyers in lower-income parts of the county in 2004 and 2005 — loans where the rates have now reset. Most, they say, are for multifamily dwellings.
Many of the loans launch into higher interest rates after two years, and most lenders will foreclose after about a year of default, said Luis Fernandez, licensed real estate salesperson for Keller Williams Realty in Scarsdale.
According to Fernandez, a lot of the buyers that got hit were in the county’s more southern towns, including Yonkers, Mount Vernon and New Rochelle.
Others in Westchester said that while foreclosures are up, there is not cause for alarm because Westchester’s raw numbers are low compared to other parts of the
country.
Gil Mercurio, president of the county Board of Realtors, said more serious than the foreclosures is the jump in short sales. While he did not have statistics, he said that’s what he’s seen anecdotally.
Meanwhile, Fairfield, another of the wealthiest counties in the area, saw a 38 percent increase in foreclosures from the level of July 2007.
In a state where foreclosures dropped overall, they jumped in Fairfield, to 557, from 403 one year earlier. That made the foreclosure rate this July around one out of every 627 homes.
Real estate experts say it’s not the high-end areas that are driving the numbers up.
“It’s because of the urban areas,” said Stuart Svirsky, president of the Mid-
Fairfield Board of Realtors. He added that the suburban areas have not seen any unusual foreclosure spike.
Svirsky said the urban parts of Fairfield, including Danbury, Stamford, Bridgeport and Norwalk, have been showing jumps in foreclosures, and have, in turn, boosted the county figures. He also said many of the foreclosures are related to homeowners taking out adjustable-rate and subprime mortgages.
According to published reports, however, while foreclosures are up significantly in the area since last year, they have also been trending downward significantly since the first quarter of this year.
Moving past Westchester and Fairfield, other parts of the suburban ring around New York City did slightly better. For example, while foreclosures rose in nearby Nassau County, Long Island, the spikes were not as severe. Also, in Bergen County, New Jersey, foreclosures actually dropped.
Even though Long Island’s foreclosure spikes may not have been marked, the overall market there has been sluggish.
Nassau County saw 479 foreclosures for the year as of July — one out of every 957 homes. That represents an 11 percent jump from the same time last year, when there were 432 foreclosures.
According to Pearl Kamer, the chief economist for the Long Island Association, a business and civic organization, many homeowners there used subprime mortgages to purchase their homes as well. Those loan choices have come home to roost, in the form of more foreclosures and a dampening of prices throughout the market.
Kamer said the MLS numbers for June, the most recent period on record, showed a 6.8 percent price drop in Nassau County and an 8.8 percent drop in Suffolk.
“We have a major foreclosure problem,” she said. “[Foreclosures] pull down real estate values in the immediate area and you have a situation with boarded-up houses.”
She said a lack of affordable housing, along with high taxes, will likely mean spillover problems that take several years to play out. She predicted a flat market through 2010 or 2011.
Unlike its counterparts of Westchester, Fairfield and Nassau counties, Bergen County has actually seen fewer foreclosures this year than last.
With an 8 percent decline in foreclosures, the county offered a bright spot for the Garden State. Bergen had only 67 houses in foreclosure this July, representing one out of every 5,197 homes. This compares to 73 foreclosures in July 2007.
But northern New Jersey as a whole, which includes a number of other counties — including Union, Essex and Hudson — didn’t perform as well. In Union County, there were 708 foreclosures in July, up 60 percent since last year. In Essex, there were 555, up 28 percent over the same period. And, in Hudson, there were 119, up 75 percent.
Still, Jeff Otteau, president of the Otteau Valuation Group and an expert on New Jersey real estate, said the state has been handling the foreclosure crisis well.
He noted that the New Jersey housing market actually got hit harder in the 1994 downturn and that there was a higher rate of foreclosures then.
Plus, he is optimistic about what’s coming down the pike.
“The good news is that we are nearing the end,” he said, explaining that he expects to see improvement by the second quarter of 2009.