A very small percentage of the country's total stock of some 99 million residential homes were zombie properties—pre-foreclosure properties that have been abandoned—in the second quarter of 2021, according to ATTOM Data Solutions, but the numbers have risen since the first quarter.
One of every 12,256 homes in the second quarter sit empty in the foreclosure process, up from one in 14,825 in the first quarter of 2021 and up from one in 12,967 in the second quarter of last year.
How are zombie homes on the rise in the midst of a nationwide foreclosure moratorium? Could this be a signal of things to come once the moratoria lift? The pros say they need more time and data to determine definitive answers.
"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," said Todd Teta, Chief Product Officer with ATTOM Data Solutions. "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. 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."
RealtyTrac's EVP Rick Sharga also offers his insight:
"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," 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."
The highest numbers of zombie properties are located in northeastern and midwestern states such as New York (2,052), Ohio (1,033), Florida (1,021), Illinois (897), and Pennsylvania (401).
More details are included in the full report at ATTOMData.com.