New Jersey’s Pre-Foreclosure Rates Hit Lowest Levels in Decades, But Struggles Remain

New Jersey’s pre-foreclosure rates have fallen to their lowest point in two decades, offering a glimmer of relief in a housing market that has long been beset by economic turbulence. However, behind the declining numbers, a sobering reality remains: for the families still at risk, the financial pressures that lead to pre-foreclosure haven’t disappeared—they’ve merely shifted.

In September 2024, 881 properties in New Jersey entered pre-foreclosure, a slight decrease of 1.34% from the previous month and a staggering 57.82% drop from the same time last year. The fall in filings suggests that fewer homeowners are reaching the brink of losing their properties, a dramatic contrast to the crisis-level peaks seen over the last two decades.

In 2010, at the height of the foreclosure epidemic, more than 105,000 homes in New Jersey faced pre-foreclosure. Even as recently as 2019, before the pandemic disrupted financial norms, that number hovered around 65,000. Today, the figures are down to a fraction of their previous highs. If the trend continues, 2024 will close as the year with the fewest pre-foreclosures since 2005, an era when housing speculation hadn’t yet turned into catastrophe.

While the numbers are improving, statistics don’t tell the full story. For the individuals behind each of these cases, even a “low” pre-foreclosure rate means a looming risk of losing their home.

The Numbers Are Down, But Has the Pressure Eased?

For Patricia Diaz, a single mother from Newark, the declining statistics mean little when she’s staring down a lender’s notice. After years of balancing two jobs, she thought she had reached financial stability. Then, the adjustable-rate mortgage on her East Ward home reset in early 2024, and her monthly payment shot up by 35% overnight.

“I’ve never missed a payment before,” she said. “And now, all of a sudden, I’m getting letters saying I’m at risk of foreclosure. It doesn’t make sense.”

Diaz is not alone. While statewide pre-foreclosures are lower than ever, many who enter the process cite a common culprit: rising interest rates and housing costs. Mortgage rates, which hovered near historic lows during the early years of the pandemic, have climbed back to pre-2008 levels, squeezing homeowners with adjustable-rate loans. Inflation, while moderating, continues to make everyday expenses more difficult to manage.

New Jersey’s affordability crisis also remains acute. The median home price in the state continues to outpace income growth, and rental prices have surged—forcing households to make difficult trade-offs between paying the mortgage, keeping the lights on, or putting food on the table.

Why Are Pre-Foreclosures Dropping?

So, if economic pressures are still squeezing homeowners, why are pre-foreclosures at multi-decade lows?

One major reason: fewer people actually own homes to begin with.

Homeownership rates in New Jersey have stagnated, particularly among younger and lower-income buyers who, in a previous era, would have been prime candidates for first-time mortgages. The last few years have seen home prices soar beyond what middle-class families can comfortably afford. Rather than buying and potentially facing foreclosure, many have remained in the rental market—giving them fewer opportunities to default, but also fewer paths toward wealth-building through property ownership.

Additionally, federal and state policies implemented during the pandemic—including foreclosure moratoriums, forbearance programs, and loan restructuring options—helped thousands of homeowners stay afloat. The ripple effects of those interventions are still being felt today, preventing a wave of financial distress from turning into an outright crisis.

What’s Next for Homeowners at Risk?

While New Jersey’s pre-foreclosure rates may be at their lowest in decades, those facing financial difficulties still have far fewer options than in the past. Pandemic-era assistance programs have expired, meaning that borrowers who fall behind today have fewer lifelines to hold onto.

Housing advocates argue that while the raw pre-foreclosure numbers look promising, the deeper issue—the affordability crisis—remains unresolved. If home prices and interest rates stay high while wages stagnate, the potential for another surge in distress remains a real possibility.

For people like Patricia, the only certainty is uncertainty. “I’ve worked too hard for this to slip away now,” she said. “I just hope there’s still some kind of help out there to keep me in my home.”

Where Do We Go from Here?

New Jersey’s gradual housing recovery may be a welcome development, but it doesn’t equal relief for those who remain at risk. If anything, the lower numbers highlight a deeper divide: homeowners who can afford to keep up with today’s financial pressures, and those for whom a single setback—an interest rate spike, an unexpected medical bill, a job loss—could spell disaster.

For now, the trend lines are moving in the right direction. But behind each data point is a family fighting to keep their place in an increasingly unaffordable market. How the state chooses to support them in the years ahead will determine whether this decline in foreclosures is a true turning point—or just a temporary lull.