Queens Foreclosures for Sale Rising in Middle Class Enclaves

by Donald Hanz on cities

Queens foreclosures for sale have been rising sharply in middle class enclaves as more employees in these areas lose jobs.

Foreclosures in New York City have spread out into all strata of society, from working-class households in the boroughs to upper class families in high-end towers in Manhattan, but in the last months of 2009, foreclosure postings have been soaring in middle class neighborhoods much more sharply than in other sectors.

In Queens, where middle class families abound after their first-generation family heads bought starter homes there decades ago, unemployment has climbed up by 200 percent over the past couple of years to 12.2 percent.

According to a report from the New York University Furman Center for Real Estate and Urban Policy, nearly 1,600 new foreclosure actions were posted in the third quarter last year, in addition to over 1,800 foreclosures filed in 2008.

In Jamaica, a lot of homes have been abandoned and been invaded by squatters, according to Yvonne Reddick, head of a neighborhood board in the area. Some Queens foreclosures for sale have been on the market for so long because they are fixer uppers, requiring a lot of money before they can be livable and functional.

The middle class are now getting hit by financial difficulties because housing, food and utility costs have sharply gone up while wages stagnated, according to the nonpartisan research group Center for an Urban Future. Director Jonathan Bowles said that life for middle class families and households on their way to middle class has become more difficult.

In addition to unemployment, the other major reason for the increase in foreclosure houses in middle class Queens neighborhoods is negative equity. According to Bill Staniford, chief executive of PropertyShark, once property values fall, distress is magnified, home prices plunge further and homeowners are forced to default.

Based on a report from Deutsche Bank, underwater home loans in New York City will soar sharply from 11 percent in 2009 to 77 percent in 2011.

Staniford added that underwater mortgages are not being refinanced by lenders and that underwater properties are difficult to sell through short sales. Banks may entertain short sale proposals initially, but oftentimes when the purchase contracts are ready, they reject the offers arguing the price offers are too low compared to the mortgage amounts.