Home foreclosures are on the rise again nationwide

In May, New Jersey had the highest foreclosure rate in the United States, with one in every 1,939 homes receiving a foreclosure notice. This rate is more than double the national average, which stands at one in every 4,320 housing units having a foreclosure filing. The state has been experiencing a surge in foreclosure activity, as lenders work through a backlog of distressed properties. This situation has been exacerbated by a slow judicial process in the state, which has contributed to the foreclosure crisis.

The report cites several factors contributing to the increased foreclosure rates:

1. Cost-of-living crisis: Americans are continuing to grapple with high inflation, which has increased the cost of everyday essentials, making it difficult for some to keep up with their mortgage payments.

2. High home prices and mortgage rates: Housing affordability is at its worst in decades, with a spike in home prices and mortgage rates. The typical salary required for homeownership has increased by 61% from what it was just four years ago.

3. Underbuilding and home shortage: Years of underbuilding have led to a shortage of homes in the country. This problem was exacerbated by the rapid rise in mortgage rates and expensive construction materials.

4. Higher mortgage rates: Higher mortgage rates over the past three years have created a "golden handcuff" effect in the housing market. Sellers who locked in a record-low mortgage rate during the pandemic have been reluctant to sell, limiting supply and leaving few options for potential buyers.

5. Economic factors: Predictions of elevated mortgage rates in 2024 and skepticism about the odds of a Federal Reserve rate hike this year contribute to the uncertainty in the housing market.

These factors combined have made it difficult for some homeowners to keep up with their mortgage payments, leading to an increase in foreclosure rates.