Share of Vacant Homes in Foreclosure Increases for Fourth Straight Quarter

ATTOM has released its Q1 2023 Vacant Property and Zombie Foreclosure Report showing that 1.3 million (1,284,048) residential properties in the U.S. sit vacant. That figure represents 1.3%, or one in 79 homes, across the nation.

The report reveals that 298,533 residential properties in the U.S. are in the process of foreclosure in Q1 of this year, up 5% from Q4 of 2022 and up 29.9% from Q1 of 2022. A growing number of homeowners have faced possible foreclosure since a nationwide moratorium on lenders pursuing delinquent homeowners, imposed after the Coronavirus pandemic hit in early 2020, was lifted in the middle of 2021.

Among those pre-foreclosure properties, 8,141 are zombie foreclosures (pre-foreclosure properties abandoned by owners) in Q1 of 2023, up 5.4% from the prior quarter and up 10.6% from a year ago. The count of zombie properties has grown in each of the last four quarters.

Despite the ongoing increase, the number of zombie-foreclosures remains historically low, with little impact on the nation's total stock of 101.1 million residential properties. Just one of every 12,415 homes in the first quarter of 2023 is vacant and in foreclosure. That ratio is up from one in 12,963 in Q4 of 2022 and from one in 13,424 in Q1 of last year.

"The potential damage from zombie foreclosures and the decay they can cause remains far off the radar screen throughout much of the country," said Rob Barber, CEO for ATTOM. "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 latest zombie foreclosure numbers continue 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 also has grown steadily since the moratorium was lifted.

But the decade of price gains boosted the typical selling profit margin up over 50 percent 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. That, along 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.

Zombie foreclosures inch up again but remain tiny portion of overall market

A total of 8,141 residential properties facing possible foreclosure have been vacated by their owners nationwide in Q1 of 2023, up slightly from 7,722 in Q4 of 2022 and from 7,363 in Q1 of 2022.

While zombie foreclosures remain a rarity in most neighborhoods around the U.S., the biggest increases from the fourth quarter of 2022 to Q1 of 2023 in states with at least 50 zombie properties are in Iowa (zombie properties up 42%, from 160 to 227), Arizona (up 25%, from 40 to 50), Oklahoma (up 20%, from 118 to 142), Maryland (up 20%, from 150 to 180) and Massachusetts (up 17%, from 63 to 74).

The biggest quarterly decreases among states with at least 50 zombie foreclosures are in Maine (zombie properties down 10%, from 67 to 60), Nevada (down 10%, from 101 to 91), Georgia (down 6%, from 83 to 78), Connecticut (down 3%, from 75 to 73) and Michigan (down 3%, from 76 to 74).

Overall vacancy rates remain virtually the same

The vacancy rate for all residential properties in the U.S. has held steady in Q1 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 percent level in the fourth quarter of 2022 (one in 79), but still down from 1.37% in Q1 of last year (one in 73).

States with the biggest annual drops in the overall vacancy rate include Tennessee (down from 1.94% of all homes in Q1 of 2022 to 1.12% in Q1 of this year), Georgia (down from 1.74% to 1.44%), Minnesota (down from 1.02% to 0.78%), New Mexico (down from 2.07% to 1.86%) and Kansas (down from 2.35% to 2.15%).

Other high-level findings from Q1 of 2023:

• Among metropolitan statistical areas in the U.S. with at least 100,000 residential properties and at least 100 properties facing possible foreclosure in Q1 of 2023, the highest zombie foreclosure rates are in Wichita, KS (10.5 percent of properties in the foreclosure process are vacant); Peoria, IL (9.9%); Cedar Rapids, IA (8%); Flint, MI (7.7%) and Palm Bay-Melbourne, FL (7.4%).
• The highest zombie-foreclosure rates in major metro areas with at least 500,000 residential properties and at least 100 homes facing foreclosure in Q1 of 2023 are in Cleveland, OH (6.1% of homes in the foreclosure process are vacant); Baltimore, MD (6%); Pittsburgh, PA (5.9%); Indianapolis, IN (5.8%) and St. Louis, MO (5.8%).
• Among the 23.7 million investor-owned homes throughout the U.S. in Q1 of 2023, about 846,000 are vacant, or 3.6%. The highest levels of vacant investor-owned homes are in Indiana (6.8% vacant), Oklahoma (6%), Alabama (6%), Kansas (5.8%) and Ohio (5.8%).
• Among the roughly 13,700 foreclosed, bank-owned homes in the U.S. during Q1 of 2023, some 13% are vacant. In states with at least 50 bank-owned homes, the largest vacancy rates are in Kansas (26% vacant), Ohio (23.3%), Iowa (22.9%), Oregon (20.7%) and Illinois (20.1%).
• The highest zombie-foreclosure rates in U.S. counties with at least 500 properties in the foreclosure process during Q1 of 2023 are in Broome County (Binghamton), NY (12.1% zombie foreclosures); Baltimore County, MD (11.2%); Peoria County, IL (11.2%); Pinellas County (Clearwater), FL (8.9%) and Lake County, IN (outside Chicago) (8.5%).
• Among zip codes with enough data to analyze, 44 of the 50 with the largest portions of overall homes in zombie status are in New York, Ohio and Illinois, including five in Cleveland, OH. The biggest ratios are in zip codes 13754 in Broome County (Deposit), NY (one in 240 homes); 44112 in Cleveland, OH (one in 252); 12090 in Rensselaer County (Hoosick Falls), NY (one in 255); 44103 in Cleveland, OH (one in 284) and 10993 in Rockland County (West Haverstraw), NY (one in 286).

To read the full report, including more data, charts and methodology, click here.