In movies about the rise of the living dead—whether raised by dark powers, alien fungus or a rogue supervirus—armies of zombies nearly always have one thing in common: they move slowly.
In the real estate industry this trope appears to be holding true as well, with the march of so-called “zombie foreclosures” barely moving this quarter, according to a pre-Halloween report from ATTOM Data Solutions, even as that metric is expected to inevitably grow in the long term.
“Zombie foreclosures are in a holding pattern this quarter—at least for now,” said Todd Teta, chief product officer with ATTOM, in a statement. “They’re still totally off the radar screen in most parts of the country, with none in most neighborhoods…depending on how fast cases wind through the courts, it’s probably just a matter of time before zombie properties begin creeping back into the mix.”
Zombie foreclosures—properties that are both vacant and in the foreclosure process—currently make up 3.3% of all properties in foreclosure, which is actually down a fraction of a percent from Q3 of this year. Less than 7,500 residential properties nationwide are “zombies” by this definition, even as foreclosures overall ticked up.
There are 223,256 residences in the process of foreclosure right now, according to ATTOM, up 3.6% over last quarter and 11.6% from the same quarter of 2020 as the end of federal protections in September have allowed more banks to begin taking delinquent borrowers to court. At the same time, overall vacancy rates have fallen slightly as the demand for homes has prevented residences from sitting empty.
One in 75 properties overall, or 1.33%, were vacant in Q4 2021, compared to 1.56% a year ago. Investor-owned properties were more than twice as likely to be vacant, according to the report, with 3.4% of the 27 million homes owned by institutions sitting vacant.
Rich Sharga, executive vice president of ATTOM subsidiary RealtyTrac, attributed the lack of abandoned properties to historic home price appreciation and continued desire for homes, even as the market has cooled slightly in recent months.
“Market dynamics—strong demand coupled with historically low inventory of homes for sale—suggest that we shouldn’t see a significant increase in zombie foreclosure properties anytime soon, even with foreclosure activity increasing,” he said in a statement. “Most financially-distressed homeowners should be able to sell their home rather than go through a lengthy foreclosure process where they’d ultimately abandon the property.”
Army of the Dead
Zombie properties often end up as blighted, ugly stains on a neighborhood—potentially a sign of bad things to come in the area, as nearly any homeowner would rather sell a foreclosed home than abandon it. Thankfully, that has not spread extensively across the country as of yet, with half of all U.S. states seeing an overall decline in zombie properties from last quarter.
But a few metros and regions have seen an alarming concentration of abandoned homes, with the top five qualifying metros seeing their share of “zombie” properties reach over 10%. Those cities are:
– Portland, Ore. – 15.3%
– Wichita, Kan. – 15%
– Cleveland, Ohio – 11.7%
– Fort Wayne, Ind. – 11%
– Honolulu, Hawaii – 10.6%
A few states also continue to carry an outsized share of zombie foreclosures, including New York with 2,049 total properties, Ohio with 925, Florida with 907 and Illinois with 758, according to the report. Broome County in New York has the dubious distinction of the highest proportion of zombie foreclosures to total properties, with one out of every 640 homes abandoned and in foreclosure (compared to one out of every 13,292 nationwide).
New Jersey appears to be a safe zone from the zombie spread, boasting four out of five counties with the lowest number of zombie foreclosures. These counties are Atlantic County, Mercer County, Bergen County and Morris County—all with less than 1% of foreclosures in zombie status.
Overall, zombie foreclosures remain concentrated in the Midwest and Northeast, according to ATTOM.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to firstname.lastname@example.org.