RealtyTrac: ‘Zombie’ Foreclosures Down 30% From Year Ago

RealtyTrac, Irvine, Calif., said vacant U.S. properties in the foreclosure process fell to just over 19,000 in the second quarter, even as the overall number of vacant residential properties crept up.

The company’s Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report showed 19,187 vacant (“zombie”) residential properties actively in the foreclosure process in May, representing 4.7 percent of all residential properties in foreclosure. This is down by 3.1 percent from April and down by 30.1 percent from a year ago.

The report also noted nearly 1.4 million vacant 1-4 unit residential properties in May, representing 1.6 percent of all residential properties, up by 2.7 percent from the previous quarter.

“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory over the past year, evidenced by 12 consecutive months of increasing bank repossessions ending in February and now evidenced by these numbers showing a sharp drop in vacant zombie foreclosures compared to a year ago,” said RealtyTrac Senior Vice President Daren Blomquist. “As these zombie foreclosures hit the market for sale they are providing a modicum of relief for the pressure cooker of escalating prices and deteriorating affordability that have defined the U.S. housing market in recent years.”

The report said states with the most vacant foreclosures were New Jersey (4,003), New York (3,352), Florida (2,467), Illinois (1,074) and Ohio (1,064). Among states with at least 100 zombie foreclosures, those with the highest zombie foreclosure rate (percentage of properties in foreclosure that are vacant) were Oregon (11.8 percent); Indiana (9.5 percent); Kentucky (8.0 percent); Maryland (7.2 percent); and Washington (6.6 percent).

Among metropolitan statistical areas with at least 100,000 residential properties, those with the most zombie foreclosures were New York (3,526); Philadelphia (1,744); Chicago (857); Miami (651); and Tampa (627). Metro areas with at least 100 zombie foreclosures that posted the highest zombie foreclosure rate (percent of foreclosure properties that are vacant) were St. Louis (10.6 percent); Indianapolis (10.2 percent); Albany, N.Y. (9.8 percent); Baltimore (9.7 percent); and Portland, Ore. (9.7 percent).

RealtyTrac reported 43,602 vacant U.S. bank-owned residential properties as of May, representing 15.9 percent of all REO residential properties and down by 5.0 percent from the previous quarter.

States with the highest percentage of vacant REO properties were Oregon (29.8 percent); Indiana (29.7 percent); Delaware (28.3 percent); Michigan (27.0 percent); and Ohio (25.0 percent). Among metropolitan statistical areas with at least 100,000 residential properties, those with the most vacant REOs were Detroit (3,982); Chicago (1,967); Miami (1,765); Atlanta (1,470); and Baltimore (1,434).

Metro areas with the highest REO vacancy rates (percentage of REOs that were vacant) were Flint, Mich. (44.7 percent); Akron, Ohio (37.6 percent); Cleveland, Ohio (33.8 percent); Peoria, Ill. (33.2 percent); and Fort Wayne, Ind. (33.1 percent).

States with the highest vacancy rate overall (not just properties in foreclosure) were Michigan (3.4 percent), Indiana (3.1 percent), Mississippi (2.8 percent), Alabama (2.6 percent), and Oklahoma (2.6 percent). Among 146 metropolitan statistical areas with at least 100,000 residential properties, those with the highest vacancy rates were Flint (7.2 percent); Youngstown, Ohio (4.7 percent); Detroit (4.4 percent); Beaumont-Port Arthur, Texas (3.9 percent); and Mobile, Ala. (3.7 percent).

Metro areas with the lowest vacancy rates were San Jose, Calif. (0.2 percent); Fort Collins, Colo. (0.2 percent); Manchester, N.H. (0.3 percent); Provo, Utah (0.3 percent); and Lancaster, Pa. (0.3 percent).

Investment properties accounted for 75 percent (1.1 million) of all vacant homes, RealtyTrac said, representing 4.4 percent of all investment properties. States with the highest residential investment property vacancy rate were Michigan (11.0 percent); Indiana (10.3 percent); Alabama (7.1 percent); Ohio (6.8 percent); and Mississippi (6.7 percent). Metro areas with the highest residential investment property vacancy rate were Flint (27.6 percent); Detroit (13.5 percent); South Bend, Ind. (12.8 percent); Youngstown (12.5 percent); and Fort Wayne (12.0 percent).