The zombies are coming! Well, not exactly, but the number of zombie properties increased slightly in the first three months of 2023, according to a new report from ATTOM Data solutions.
The organization recently released its latest Vacant Property and Zombie Foreclosure Report, showing that 1,284,048 residential properties in the U.S. sit vacant—an increase of nearly 20,000 homes from the fourth quarter of 2022.
While vacant properties accounted for 1.3%, or one in 79 homes, nationwide—one out of every 12,415 homes in the first quarter of 2023 is vacant and in foreclosure.
The report also found that 298,533 residential properties in the U.S. are in the process of foreclosure in the first quarter of this year, a 5% uptick from the fourth quarter of 2022 and a 29.9% increase from the first quarter of 2022.
Among those pre-foreclosure properties, 8,141 are zombie foreclosures—pre-foreclosure properties abandoned by owners—in Q1 2023, up 5.4% from the previous quarter and up 10.6% from a year ago. The count of zombie properties has grown in each of the last four quarters.
- A total of 8,141 residential properties facing possible foreclosure have been vacated by their owners nationwide in the first quarter of 2023, up slightly from 7,722 in the fourth quarter of 2022 and from 7,363 in the first quarter of 2022.
- The biggest increases from the fourth quarter of 2022 to the first quarter of 2023 in states with at least 50 zombie properties are in Iowa (up 42%), Arizona (up 25%), Oklahoma (up 20%), Maryland (up 20%) and Massachusetts (up 17%).
- The biggest quarterly decreases among states with at least 50 zombie foreclosures are in Maine (down 10%), Nevada (down 10%), Georgia (down 6%), Connecticut (down 3%) and Michigan (down 3%).
- The vacancy rate for all residential properties in the U.S. has held steady in the first quarter of 2023 after dropping in the prior three quarters. It now stands at 1.27% (one in 79 properties), virtually the same as the 1.26% level in the fourth quarter of 2022 (one in 79), but still down from 1.37% in the first quarter of last year (one in 73).
- States with the biggest annual drops in the overall vacancy rate include Tennessee, Georgia, Minnesota, New Mexico and Kansas.
It’s been nearly two years since the nationwide moratorium on lenders pursuing delinquent homeowners was lifted, which ATTOM experts acknowledged as a factor in the growing number of homeowners facing possible foreclosure.
According to ATTOM, the latest zombie foreclosure numbers, while minimal, are one of the most enduring effects of the 11-year U.S. housing market boom that more than doubled the national median home value.
The runup stalled in the second half of last year as the median single-family home price dipped 8% nationwide. The number of foreclosures has also grown steadily since the moratorium was lifted.
Despite the ongoing increase, the number of zombie-foreclosures remains historically low, according to ATTOM.
“The potential damage from zombie foreclosures and the decay they can cause remains far off the radar screen throughout much of the country,” said ATTOM CEO Rob Barber. “Although, there are few signs that indicate this could change over the coming months, as the numbers continue ticking upward, along with foreclosures in general. That’s something we will continue to keep an eye on, especially in economically distressed communities.”
The decade of price gains boosted the typical selling profit margin up over 50% and raised homeowner equity to the point where almost half of all mortgaged homes across the country are worth at least twice what owners still owe on their loans, ATTOM stated.
This, coupled with high employment and other factors, has left most homeowners in a strong enough position to resist foreclosure or at least sell their homes if they fall far enough behind on their mortgages to face a lender takeover, noted the organization.