About 1.4 million residential properties across the country, representing 1.4 percent of all homes, are vacant, according to a ATTOM Data Solutions second-quarter 2021 Vacant Property and Zombie Foreclosure Report.
The report also states 223,671 properties are in the process of foreclosure in the second quarter, up 27.5 percent from the first quarter but down 13.3 percent from a year ago. The number of pre-foreclosure homes, or “zombie” homes, sitting empty in the second quarter was 8,078, up 21 percent from the first quarter and 5.6 percent from a year ago.
The portion of pre-foreclosure properties that have been abandoned into zombie status dropped slightly, from 3.8 percent in the first quarter to 3.6 percent in the second. The portion of zombie properties, one of every 12,256 homes in the second quarter, rose from one in 14,825 in the first quarter and one in 12,967 a year ago.
“The latest numbers show a spike in zombie properties during the second quarter that stands out compared to recent times, especially given the moratorium. It may simply be due to lenders foreclosing on homes that were already abandoned. We are watching that closely to see what it means and whether it’s the start of new trend,” ATTOM Chief Product Officer Todd Teta said in a release.
“But even with the increase, zombie foreclosures are still just a dot on the housing market radar screen, which is more testimony to how strong the housing market remains,” he said. “You can still walk around most neighborhoods around the country and literally not find a single empty house going through the takeover process, and that remains very good news for current homeowners, as well as potential homeowners.”
Among states with at least 100 zombie foreclosures during the second quarter, some the biggest increases from the first quarter include Maryland (up from 44 to 151), Iowa (up from 43 to 114), North Carolina (up from 68 to 119), South Carolina (up from 79 to 133) and Ohio (up from 633 to 1,033). New York continues to have the highest number of zombie properties in the second quarter (2,052), followed by Ohio (1,033), Florida (1,021), Illinois (897) and Pennsylvania (401).
“We’ve seen this before: government officials who are trying to prevent unnecessary defaults delay foreclosure proceedings for so long that the distressed borrowers simply abandon the property before the foreclosure takes place,” RealtyTrac Executive Vice President Rick Sharga said. “There are probably two things behind the increase in zombie foreclosures: First, the fact that most foreclosure starts today are on vacant and abandoned properties; and second, there were also almost 250,000 loans in foreclosure prior to the pandemic, and they’ve been in limbo for over 14 months. Very likely that some of the borrowers in those properties have moved on, but lenders have been prohibited from beginning foreclosure proceedings on those loans.”
States with the biggest quarterly decreases in overall vacancy rates are Rhode Island (down from 1.3 percent of all homes in the first quarter to 1 percent in the second quarter), Mississippi (down from 2.5 percent to 2.2 percent), Kentucky (down from 1.2 percent to 1.1 percent), South Carolina (down from 1.7 percent to 1.6 percent) and Kansas (down from 2.5 percent to 2.4 percent).