Zombie foreclosures grow, raising a red flag for market watchers
While the overall amount of foreclosures continued its coronavirus-moratorium descent, the share of zombie properties grew during the third quarter of 2020, according to Attom Data Solutions.
In an analysis of data pulled the week of Aug. 17, Attom’s Vacant Property and Zombie Foreclosure Report showed 215,886 properties in the foreclosure process and approximately 7,960 — or 3.7% — sit vacant. The share rose from 2.97% in the second quarter and from 3.2% the year before. Meanwhile, zombie properties totaled 7,652 and 9,612 during those respective time periods.
Overall, zombie foreclosures represent one in every 12,486 U.S. residential properties as of the week of Aug. 17.
"Abandoned homes in foreclosure remain little more than a spot on the radar screen in most parts of the United States, posing few, if any, problems from neighborhood to neighborhood," Todd Teta, chief product officer with Attom Data Solutions, said in a press release. "But the latest numbers do throw a small potential red flag into the air, given the increase in the percentage of zombie foreclosures."
New York again led the country in zombie properties at 2,136, though that total continues to tick down. Florida followed with 1,028, then 971 in Illinois and 887 in Ohio. By zombie share of total foreclosures, Indiana leads at 8.5%, followed by 6.8% in Kansas, 6.5% in Ohio and 6.3% in Rhode Island.
About 1.6% of all 99.4 million homes sit vacant in the United States, totaling over 1.57 million single-family homes and condos.
On Thursday, the FHFA announced that the GSEs would extend the moratorium period on foreclosures and evictions to the end of 2020, which will make the actual number of homes in distress harder to track.
"It appears that an increased number of vacant foreclosure properties may be an unintended consequence of the foreclosure moratoria put in place by federal, state and local governments," said Rick Sharga, executive vice president at RealtyTrac. "Vacant properties can contribute to neighborhood blight, and become safety hazards — especially during a pandemic. So the sooner these abandoned properties can be processed and sold to homebuyers or investors, the better it will be for communities and neighborhoods across the country."