Where Have All the Foreclosed Properties Gone?
In March 2009 the stock of bank-owned, foreclosed properties—often referred to in the industry as REOs—in New York City reached a high of 2,095. These REO properties are usually vacant and evidence suggests that they can have negative effects on neighborhoods by decreasing neighboring property values or increasing crime. By the end of 2012, there were only 684 REO properties in the city. Does this mean the foreclosure crisis is over? What is going on?
A few things:
- The length of the foreclosure process in New York State is increasing, meaning that it takes longer for properties to move from foreclosure notice to foreclosure auction. On average, properties that went to auction in 2012 received their foreclosure notice three years earlier.
- Because of a mix of interventions, such as the HAMP program, more borrowers are able to modify their loans and avoid foreclosure.
- Properties continue to sell out of REO to a mix of owner-occupiers and investors.
For more on REO properties in New York City, as well as in Fulton County, Georgia, and Dade County, Florida, see our recent paper, “The Foreclosure Crisis and Community Development: Exploring REO Dynamics in Hard-Hit Neighborhoods.”
Data source: Furman Center analysis of New York City Department of Finance data