2nd Quarter ‘Zombie’ Foreclosures Up 21%
ATTOM Data Solutions, Irvine, Calif., released its second-quarter Vacant Property and Zombie Foreclosure Report, showing 1.4 million residential properties in the United States were vacant in the second quarter quarter, representing 1.4 percent of all homes.
The report said 223,671 properties are in the process of foreclosure in the second quarter, up 27.5 percent from the first quarter but down 13.3 percent a year ago. Pre-foreclosure homes or “zombie” homes sitting empty (8,078 in the second quarter) rose by 21 percent quarterly and by 5.6 percent annually. The portion of pre-foreclosure properties that have been abandoned into zombie status dropped slightly, from 3.8 percent in the first quarter to 3.6 percent in the second quarter.
Todd Teta, Chief Product Officer with ATTOM, noted among the nation’s total stock of 99 million residential properties, the portion represented by zombie properties remains miniscule, but grew slightly in the second quarter. One of every 12,256 homes in the second quarter sit empty in the foreclosure process, up from one in 14,825 in the first quarter and up from one in 12,967 a year ago.
Teta said the count of zombie foreclosures rose this quarter despite an ongoing federally imposed moratorium on foreclosures aimed at helping homeowners get through economic troubles stemming from the worldwide coronavirus pandemic.
“It may simply be due to lenders foreclosing on homes that were already abandoned,” Teta said. “We are watching that closely to see what it means and whether it’s the start of new trend. But even with the increase, zombie foreclosures are still just a dot on the housing market radar screen, which is more testimony to how strong the housing market remains. You can still walk around most neighborhoods around the country and literally not find a single empty house going through the takeover process, and that remains very good news for current homeowners, as well as potential homeowners.”
The report said 8,078 residential properties facing possible foreclosure have been vacated by their owners nationwide in the second quarter, up from 6,677 in the first quarter and from 7,652 a year ago. The number increased, quarter over quarter, in 33 states and the District of Columbia.
“We’ve seen this before – government officials who are trying to prevent unnecessary defaults delay foreclosure proceedings for so long that the distressed borrowers simply abandon the property before the foreclosure takes place,” said Rick Sharga, executive vice president with ATTOM subsidiary RealtyTrac. “There are probably two things behind the increase in zombie foreclosures: First, the fact that most foreclosure starts today are on vacant and abandoned properties; and second, there were also almost 250,000 loans in foreclosure prior to the pandemic, and they’ve been in limbo for over 14 months. Very likely that some of the borrowers in those properties have moved on, but lenders have been prohibited from beginning foreclosure proceedings on those loans.”
The report said New York continues to have the highest number of zombie properties in the second quarter of 2021 (2,052), followed by Ohio (1,033), Florida (1,021), Illinois (897) and Pennsylvania (401). Among 159 metropolitan statistical areas with at least 100,000 residential properties and at least 100 properties facing possible foreclosure, the highest zombie rates in the second quarter were in Peoria, Ill. (14.2 percent); Wichita, Kan. (14.1 percent); South Bend, Ind. (12 percent); Youngstown, Ohio (11.6 percent) and Cleveland, Ohio (11.5 percent).