Zombie Foreclosures on the Upswing
More U.S. homes fall into vacant zombie foreclosure realm in third quarter of 2020.
ATTOM Data Solutions’ third quarter 2020 Vacant Property and Zombie Foreclosure Report revealed that 1,570,265 residential properties in the U.S. are vacant. That’s 1.6% of all homes.
The report analyzespublicly recorded real estate data collected by ATTOM Data Solutions, including foreclosure status, equity and owner-occupancy status, matched against monthly updated vacancy data.
The third quarter analysis shows that about 216,000 homes are in the process of foreclosure, with about 7,960, or 3.7%, sitting empty as so-called “zombie foreclosures.”
The count of properties in the process of foreclosure (215,886) in third quarter 2020 is down 16% from the second quarter of 2020 (258,024). But the percentage of those properties that have been abandoned as zombie foreclosures is up from 3% in the second quarter of 2020.
Despite the increase, the 7,961 zombie foreclosure properties continue to represent a small portion of the nation’s stock of 99.4 million residential properties—just one of every 12,500 homes.
The third quarter 2020 data shows a drop in the number of homes at some point in the foreclosure process, but an increase in the level sitting vacant at a time when the federal government is trying to shield the housing market from an economic slide stemming from the coronavirus pandemic.
Among the government’s key measures is a temporary prohibition against lenders foreclosing on government-backed mortgages. The ban, which is set to expire Aug. 31, 2020 and affects about 70% of U.S. homes, was enacted under the CARES Act Congress passed in March. It was later extended to help borrowers who have lost jobs or other sources of income during the pandemic.
“Abandoned homes in foreclosure remain little more than a spot on the radar screen in most parts of the United States, posing few, if any, problems from neighborhood to neighborhood. But the latest numbers do throw a small potential red flag into the air, given the increase in the percentage of zombie foreclosures,” said Todd Teta, chief product officer with ATTOM Data Solutions.
Highest Zombie Foreclosures Rates
Owners nationwide have vacated a total of 7,961 residential properties facing possible foreclosure in third quarter 2020. That figure comprises 3.7%, or one in 27, of all properties in the foreclosure process. Those numbers are up from 3%, or one in 34, in second quarter 2020, and 3.2%, or one in 32, in third quarter 2019.
States where zombie foreclosure rates exceed the national percentage are clustered in the Midwest and South (Kansas, 15%, or one in seven, properties in the foreclosure process; Missouri,11.2%, or one in nine; Georgia, 11%, or one in nine; Kentucky, 10.7%, or one in nine; and Tennessee, 10.3%, or one in 10).
States where the rates fall below the national level are mainly in the Northeast and West. Those states include Utah (1.1%, or one in 87 properties in the foreclosure process), Idaho (1.2%, or one in 84), New Jersey (1.6%, or one in 62), Colorado (1.8%, or one in 56) and California (2%, or one in 50).
Increases in All But One State
Zombie-foreclosure rates rose from the second to the third quarter of 2020 in every state except Hawaii. Rates also decreased in the District of Columbia.
States with the largest increases included Kansas (up from 7.4% to 15% of all properties in the foreclosure process), Missouri (up from 4% to 11.2%), Georgia (up from 3.9% to 11%), Kentucky (up from 3.9% to 10.7%) and Nebraska (up from 4% to 10.3%).
“It appears that an increased number of vacant foreclosure properties may be an unintended consequence of the foreclosure moratoria put in place by federal, state and local governments,” said Rick Sharga, executive vice president at RealtyTrac. “Vacant properties can contribute to neighborhood blight and become safety hazards, especially during a pandemic. So, the sooner these abandoned properties can be processed and sold to homebuyers or investors, the better it will be for communities and neighborhoods across the country.”
Northeast and Midwest Lead
New York continues to have the highest actual number of zombie properties (2,136), followed by Florida (1,028), Illinois (971), Ohio (887) and New Jersey (356).
California leads in the West, with 265. Oklahoma leads the South, with 133.
Highest Ratios
Despite increases in the rates of zombie foreclosures in third quarter 2020, those properties represent just one in every 12,486 residential properties of all kinds in the U.S., including those not facing possible bank takeover.
States with the highest ratios are concentrated in the Northeast and Midwest, including New York (one in 1,934 properties), Illinois (one in 4,077), Ohio (one in 4,328), Florida (one in 6,747) and New Jersey (one in 7,476).
States with the lowest ratios include Idaho (one in 188,805 properties), Utah (one in 98,766), Arkansas (one in 78,267), Texas (one in 70,746) and Virginia (one in 69,686).
High-level Findings
Based on third quarter data, the report revealed the following:
- Among 158 metropolitan areas with at least 100,000 residential properties in third quarter 2020, the highest zombie-foreclosure rates include Peoria, Illinois (16.4% of properties in the foreclosure process); Wichita, Kansas (15.3%); Kansas City, Missouri (13.4%); Omaha, Nebraska (12.7%); and Cleveland, Ohio (12.6%).
- Among major metro areas with at least 500,000 residential properties, the lowest zombie foreclosure rates are in Austin, Texas (no zombie foreclosure properties); San Francisco, California (0.7%); Philadelphia, Pennsylvania (1.6%); Los Angeles, California (1.7%) and Charlotte, North Carolina (1.8%).
- The top zombie-foreclosure rates in counties with at least 500 properties in foreclosure include Cuyahoga County (Cleveland), Ohio (14.1%); Broome County (Binghamton), New York (10.9%); Onondaga County (Syracuse), New York (10%); Pinellas County (Clearwater), Florida (8.5%) and Summit County (Akron), Ohio (7.8%).
- Among ZIP codes with at least 100 properties in foreclosure, those where the zombie foreclosure rate exceeds 5% remain concentrated in New York, Florida, Ohio and Illinois. Those ZIP codes with the top percentages include 44108, 44112 and 44105, all in Cleveland, Ohio; 61604 in Peoria, Illinois; and 13601 in Watertown, New York.
- The highest levels of vacant investor-owned homes are in Indiana (8.5%), Kansas (6.8%), Ohio (6.5%), Rhode Island (6.3%) and Mississippi (6.1%).
- The highest overall vacancy rates for all residential properties remain in Kansas (2.7%), Mississippi (2.7%), Oklahoma (2.7%), Tennessee (2.6%) and Indiana (2.5%). The lowest are in New Hampshire (0.4%), Delaware (0.4%), Vermont (0.5%), Idaho (0.6%) and Colorado (0.8%).
