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As U.S. Home Prices Rise, Banks Processing Zombie Homes at Accelerated Rate

As U.S. Home Prices Rise, Banks Processing Zombie Homes at Accelerated Rate

Residential News » Tampa Edition | By Michael Gerrity | June 11, 2015 9:59 AM ET



According to RealtyTrac, the number of 'Zombie Homes' - homes that are vacated and waiting in the legal foreclosure process by lenders - is down ten percent in Q2, 2015 from the same period last year.

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Daren Blomquist

"A growing number of states and cities have enacted public policy measures to combat the problem of zombie foreclosures, and we are seeing the results of those efforts in the overall decrease nationwide as well as in several hard-hit markets such as Chicago, Miami and Cleveland," said Daren Blomquist, vice president at RealtyTrac. "Still, as banks push through long-deferred foreclosures that are more likely to be owner-vacated this year, we are seeing a somewhat surprising increase in zombie foreclosures in markets with overall low foreclosure rates such as Los Angeles, Houston and Boston.

"The average estimated market value of an owner-vacated foreclosure is 22 percent below the average estimated market value of an owner-occupied foreclosure, indicating that it is in a foreclosing bank's best interest to have a home occupied during the foreclosure process and also demonstrating how these zombies are contributing to blight in neighborhoods across the country."

RealtyTrac reports the following key highlights:

  • 127,021 owner-vacated zombie foreclosures as of the end of the second quarter, down 11 percent from previous quarter and down 10 percent from Q2 2014
  • Zombie foreclosures represented about one in five of the 527,047 U.S. properties in foreclosure
  • One in every 1,040 U.S. housing units is an owner-vacated zombie foreclosure
  • Zombies still increased in 91 of the 183 metropolitan statistical areas analyzed in the report
  • Major markets where the number of zombies increased from a year ago included New York (up 38 percent), Los Angeles (up 39 percent), Houston (38 percent), Philadelphia (up 19 percent), and Boston (up 14 percent).
  • Major markets where the number of zombies decreased from a year ago included Chicago (down 28 percent), Dallas (down 27 percent), Miami (down 46 percent), Atlanta (down 33 percent), and Phoenix (down 14 percent).
  • Nationwide one in every 1,040 total housing units was a zombie foreclosure
  • The highest zombie foreclosure rates among the 183 metro areas analyzed in the report were in Atlantic City, New Jersey (one in 130 housing units), Trenton, New Jersey (one in 166 housing units), Tampa, Florida (one in 218 housing units), Binghamton, New York (one in every 260 housing units), and Ocala, Florida (one in every 262 housing units).
  • Among the states the highest zombie foreclosure rates were in New Jersey (one in every 210 housing units), Florida (one in every 324 housing units), New York (one in every 476 housing units), Nevada (one in every 495 housing units), and Indiana (one in every 574 housing units).
  • The average market value of an owner-vacated zombie foreclosure in the second quarter was $195,856, 78 percent (or 22 percent below) the average market value of owner-occupied foreclosures ($251,236). Data at state and metro level available.
  • The average square footage of an owner-vacated zombie foreclosure in the second quarter was 1718, 92 percent of the average square footage of owner-occupied foreclosures (1873). Data at state and metro level available.
  • 6 percent of all owner-vacated zombie foreclosures involved a homeowner who is deceased, compared to 3 percent of all owner-occupied foreclosures with a deceased homeowner.

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