So-called “zombie properties”, or homes that sit vacant due to foreclosure, have become difficult to find in the last few years as the economy recovered from the Great Recession of the late 2000s.
However, experts say that with coronavirus pandemic-related foreclosure moratoriums now at an end, we could soon see a backlog of foreclosures resulting in a new wave of zombie properties emerging in American neighborhoods.
ATTOM data solutions, a real estate data supplier, said in its latest research that just 1.3% of homes nationwide are currently sitting vacant due to foreclosure. But another 223,000 residential homes are currently in the process of foreclosure, a number that’s up 11.6% from one year ago.
Of those pre-foreclosure properties, around 7,342 are currently sitting vacant, ATTOM’s data shows. The portion of pre-foreclosure homes that are abandoned fell slightly from 3.5% in the third quarter to 3.3% now.
According to ATTOM, the zombie foreclosure rate is one of many measures that show how the “decade-long U.S. housing market boom continues marching ahead despite the ongoing economic threat of the coronavirus pandemic.”
“Home prices in much of the country have soared more than 10 percent over the past year, seller profits commonly exceed 40 percent, and most neighborhoods literally have no empty, blight-inducing homes at some stage in the foreclosure process,” ATTOM’s researchers said.
However, researchers believe the number of foreclosures will increase in the coming year, with an estimated 1.5 million to 2 million U.S. homeowners in some kind of forbearance program when the foreclosure moratorium ended on July 31. For now, foreclosure cases are growing but still at record lows.
ATTOM Chief Product Officer Todd Teta said zombie foreclosures this quarter are in a “holding pattern” and remain “off the radar screen” in most parts of the U.S.
“That’s probably going to change soon because lenders can now return to court and take back properties from owners who can’t keep up on their mortgage payments,” Teta said. “Foreclosure activity already is on the upswing. So, depending on how fast cases wind through the courts, it’s probably just a matter of time before zombie properties begin creeping back into the mix.”