Looking for a new real-estate-related internet rabbit hole to fall into? We recently lost the better part of an afternoon playing around with the data sets on RealtyTrac, a site that tracks national and local foreclosure data (and also features listings of properties that are up for foreclosure auction).
While foreclosures aren't necessarily the first thing that jump to mind when you think of current NYC real estate trends, they almost certainly affect more people than, say, the sale of another $100 million penthouse. And we also noticed some interesting trends when playing around with charts for Manhattan, Brooklyn, and Queens—look how steadily the average price of a foreclosure property drops from Manhattan (where most are over $1 million), Brooklyn (where most are in the $400K-$500K range), and Queens (where most are between $100K and $200k). And on the filp side, note how many more foreclosure properties there are in the outer boroughs than in Manhattan:
We wouldn't think anyone buying a $1 million Manhattan property would ever end up in a state of foreclosure (or pre-foreclosure, as is the case with most of the properties represented in these charts), but as it turns out, foreclosure rates pretty accurately mirror the rest of the market. "The further out you get, the more likely you're going to see foreclosures," explains RealtyTrac Vice President Daren Blomquist, who adds, "In part because the markets are less expensive, you'll see less expensive foreclosures."
However, it's important to take the numbers with a grain of salt, as they're skewed by a variety of factors. "Because of New York's lengthy foreclosure process, we see what we call 'zombie foreclosures,'" explains Blomquist, meaning that the same property can linger in a state of foreclosure limbo for years, as has happened with numerous Sandy-related foreclosures in Queens and Long Island.
Another reason a property might end up in foreclosure and never actually hit the market? A nasty divorce proceeding. "A common tactic in divorces is for the breadwinner to stop paying the mortgage or the co-op maintenance" in order to force the other party into action, says appraiser and Miller Samuel data guru Jonathan Miller. (Unsurprisingly, a co-op with a defaulting resident acts much more quickly than New York State, Miller notes). "What really matters [when looking at numbers] is understanding if something is a true foreclosure or just a notice of default." But if it is a real foreclosure? You might be able to buy at a pretty steep discount.