Zombie entertainment is hot right now. From the surprise popularity of Netflix’s teen-focused Korean drama series “All Of Us Our Dead” to big Hollywood tentpoles like last year’s “Resident Evil” reboot and Zack Snyder’s “Army of the Dead,” audiences are loving the shambling, gory excitement of bitey corpses and brain-eaters.
Not nearly as many people (if anyone) are fans of so-called “zombie foreclosures”—properties that are vacant and also foreclosed on—which often create blight in neighborhoods and indicate more severe economic hardship. Thankfully, these have not seen the same surge as the fictional variety of zombies, with a new report from ATTOM Data Solutions showing zombie foreclosures still contained for the time being.
“Even with foreclosure activity rising, it doesn’t seem likely that we’ll see a significant increase in the number of zombie properties,” said Rick Sharga, executive vice president of ATTOM subsidiary RealtyTrac in a statement. “Zombie status is most likely during a long, protracted foreclosure process, but with $23 trillion in homeowner equity, and demand outstripping supply, most distressed borrowers should be able to sell their home at a profit before the process drags on.”
Across the country, 7,363 properties qualify for “zombie” designation, according to the report, a number that has remained relatively steady since federal protections for borrowers sunsetted back in July. It’s also down a fractional 0.9% from last quarter.
At the same time, overall foreclosures ticked up slightly, 3% higher now than in Q4 2021.
This has not yet reached the crisis level that some feared, with 229,864 properties currently in the foreclosure process—31% higher than in Q1 2021, when the nationwide foreclosure moratorium was still active, but only ticking up slightly after an initial surge last fall.
As far as zombie foreclosures, the prognosis is positive, but not certain, according to ATTOM Chief Product Officer Todd Teta.
“The problem of empty properties in foreclosure and the blight they can cause still remains off the table almost everywhere in the country. You’d need to search far and wide in most communities to find even one,” said Teta. “But the rosy picture is again in danger. That’s because foreclosure activity has started to kick upward since the moratorium was lifted. While it’s unlikely that a tidal wave of zombie properties is headed our way as the economy improves, the number seems likely to head up to some degree this year.”
Zombie Regions
Since July, zombie foreclosures have largely been concentrated in the Northeast and Midwest—a trend that is likely to persist if overall numbers go up, according to Sharga.
“If we do see a jump in the number of zombie properties, it will likely happen in states like New York, Illinois and Florida,” he noted. “Judicial foreclosures in these states often get delayed by court backlogs, and the foreclosure process has sometimes dragged on for over 1,000 days.”
New York continues to have the highest raw number of zombie properties (2,074 the first quarter of 2022), followed by Ohio (942), Florida (916), Illinois (676) and Pennsylvania (356).
Proportionally, a handful of qualifying metros continue to see elevated rates of zombie foreclosures, with Wichita, Kansas (14.8% of properties in the foreclosure process are vacant); Springfield, Missouri (14.7%); Peoria, Illinois (11.6%); Fort Wayne, Indiana (10.9%) and Cleveland, Ohio (10.8%) taking that dubious honor.
A handful of states with relatively low zombie numbers saw outsized spikes this quarter, with Connecticut soaring 520% (from ten zombie properties to 62) and Iowa up 207% (43 zombies to 132).
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.
