NEW JERSEY — With inflation still high, foreclosures nearing pre-pandemic levels and a recession potentially looming, new analysis warns that New Jersey has some of the nation’s most vulnerable housing markets. Meanwhile, the Garden State has one of the highest foreclosure rates in the United States, according to new reports from ATTOM.
New Jersey had the nation’s fourth-highest rate of properties entering foreclosure filings in August — 1 out of 2,441 housing units, according to the real estate data curator. Only Illinois (1 in every 1,926), Delaware (1 of every 2,387) and South Carolina (1 in every 2,417) had higher rates.
Based on gaps in home affordability, underwater mortgages, foreclosures and unemployment, many of New Jersey’s housing markets show among the highest risks of decline in the nation, according to ATTOM.
Nationally, inflation slowed down in August for the second-straight month, but prices remained 8.3 percent higher than the prior year, according to the federal Consumer Price Index report. The global inflation crisis has added difficulties for New Jerseyans, who already live in a state that consistently has one of the nation’s highest costs of living.
“The Federal Reserve has promised to be as aggressive as it needs to be in order to get inflation under control, even if its actions lead to a recession,” said Rick Sharga, ATTOM’s executive vice president of market intelligence. “Given how little progress has been made reducing inflation so far, the Fed’s actions seem more and more likely to drive the economy into a recession, and some housing markets are going to be more vulnerable than others if that happens.”
Many of New Jersey’s most vulnerable markets include suburbs of New York and Philadelphia. Bergen, Essex, Ocean, Passaic, Sussex, Union, Camden and Gloucester Counties are among the nation’s 50 most vulnerable housing markets based on data from the second quarter of 2022, according to ATTOM.
Out of the top 50 most vulnerable counties, three in New Jersey had among the highest rates of homes with a foreclosure action during the second quarter. Cumberland County (1 in 373 homes), Warren County (1 in 373) and Camden County (1 in 462). Only Cuyahoga County (Cleveland), Ohio, had a higher foreclosure rate (1 in 365 homes) on the list of vulnerable markets.
New Jersey’s unemployment rate totaled 3.9 percent in July — tied for 15th-highest in the nation, according to the U.S. Bureau of Labor Statistics. The state’s unemployment rate, however, has steadily declined since the early pandemic, when it reached 15.8 percent in May 2020.
But the unemployment rate provides an incomplete picture of New Jersey residents’ economic challenges. Even before the pandemic, many families in the state struggled with the cost of living. Thirty-seven percent of New Jersey households struggled to afford basic necessities in 2018, according to data from United Way of Northern New Jersey.
U.S. private-sector activity contracted for the second straight month in August, reaching its weakest point in 18 months. There’s a 45 percent chance of a national recession within a year and a 50-50 chance in two years, according to a Reuters poll of economists.
Read ATTOM’s full reports on foreclosures and housing-market risk.
