The number of "zombie" foreclosures in the U.S. declined both quarter-over-quarter and year-over-year in the third quarter of 2014, according to RealtyTrac's Q3 2014 Zombie Foreclosure Report released today.
Zombie properties, which are residential properties in the process of foreclosure that have been deserted by the owner but are not yet fully foreclosed upon, totaled 117,298 nationwide in Q3, according to RealtyTrac. This was a decline of 17 percent from Q2 2014 (141,406) and of 23 percent from Q3 2013 (152,033). Zombie properties comprised 18 percent of all active foreclosures in the U.S. in Q3. Most of these zombie properties will likely end up as short sales, foreclosure auction sales, or bank-owned (REO) sales. Zombie properties accounted for about 18 percent of all active foreclosures in Q3 2014, according to RealtyTrac.
"The most effective preventative vaccine for the blight caused by vacant, abandoned foreclosures has proven to be a short and efficient foreclosure process,” said Daren Blomquist, VP at RealtyTrac. "Absent that, the best antidote for a zombie foreclosure infestation is a pro-active land bank program like that in Cleveland and more recently Chicago designed to aggressively take possession of vacant foreclosures and rehab or demolish them. Meanwhile, markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie foreclosure breeding ground. As we see a backlog of delayed distress finally hit the foreclosure pipeline in some of those markets, the problem is coming more to light."
The number of zombie foreclosures declined year-over-year in 33 states and in 152 out of 212 metropolitan areas (60 percent) with a population of more than 200,000 in Q3, according to RealtyTrac. The state that saw the biggest year-over-year decline was Missouri, at 73 percent, followed by Virginia (59 percent), California (56 percent), Massachusetts (46 percent), New Hampshire (45percent), and Illinois (44 percent).
The metro area with the largest drop in zombie foreclosures from Q3 2013 to Q3 2014 was Portland, Oregon, at 53 percent. Cleveland, Phoenix, and Boston each saw a decline of 52 percent, and zombie foreclosures fell by 51 percent year-over-year in Jacksonville, Florida, RealtyTrac reported.
Of the 16 states that saw a year-over-year increase zombie foreclosures for Q3, New Jersey led the way with 75 percent, followed by North Carolina (65 percent), Oklahoma (37 percent), New York (30 percent), and Alabama (29 percent), according to RealtyTrac. The five metro areas that experienced the largest year-over-year increase in zombie foreclosures were Trenton, New Jersey (106 percent), Atlantic City, New Jersey (98 percent), Rochester, New York (49 percent), Washington, D.C. (up 40 percent), and New York, New York (38 percent).