Zombie foreclosures rise, could be indicative of what’s to come
Just in time for Halloween, Attom’s Vacant Property and Zombie Foreclosure Report showed 200,065 properties in the foreclosure process in the fourth quarter and 7,612 — or 3.8% — sit vacant. While the total zombie foreclosures declined, the share rose from 3.7% in the third quarter and 3% year-over-year.
Overall, zombie foreclosures — empty homes that are in the foreclosure process — represent one in every 13,100 U.S. residential properties.
A booming housing market and coronavirus-related foreclosure moratoria kept zombie properties in check over the past two quarters. Fannie Mae and Freddie Mac extended their moratorium through the end of 2020. However, they could start rising from the dead once those restrictions lift.
“Zombie foreclosures have been barely an issue around most of the country for over a year, and they’re even less of one now,” Todd Teta, chief product officer with Attom Data Solutions, said in the report. “All that could change in a flash when foreclosures are allowed to resume or if the coronavirus takes a toll on the market. But for now, things are steady as they go, with the overall numbers down and the rates of zombie properties pretty much unchanged.”
Iowa posted the highest proportion of zombie foreclosures at 15.5%, trailed by 12% in Kentucky and 10.2% in Missouri. At the metro level, Kansas City, Mo., had the highest share at 17.2%, Peoria, Ill., came second at 16.3% and Omaha, Neb., third at 15%.
New York continues to pace the nation in zombie properties at 2,131 followed by Florida with 1,027 and 934 in Illinois and 836 in Ohio. Indiana leads by zombie share of investor-owned homes at 8.3%, followed by 6.8% in Kansas, 6.6% in Michigan and 6.5% in Ohio.
“Some of the states with the highest rate of zombie foreclosure properties are also states that have been among the hardest hit by the COVID-19 pandemic,” said Rick Sharga, executive vice president at RealtyTrac. “When the government bans on foreclosure activity expire, it wouldn’t be a surprise to see the number of defaults in those states increase more rapidly than in other parts of the country, and the number of zombie foreclosure properties rise more dramatically in those states as well.”
Nearly 1.56 million of the 99.5 million homes in the United States sit vacant, totaling a 1.6%, share of single-family homes and condos.