The number of homes in the foreclosure process that are vacant – known as zombie foreclosures – are lessening their trail of destruction on housing markets. Zombie foreclosures made up about 18 percent of all active foreclosures (or 117,298) in the third quarter, down from 23 percent (or 152,033) a year ago, according to RealtyTrac’s Third Quarter 2014 Zombie Foreclosure Report.
The homes are vacated by home owner before the foreclosures are completed.
“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, vice president 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.”
The state that saw the largest declines in zombie foreclosures in the third quarter compared to a year ago was Missouri, where such foreclosures have fallen by 73 percent. Zombie foreclosures have also fallen in Virginia, by 59 percent; California (down 56 percent); Massachusetts (down 46 percent); New Hampshire (down 45 percent); and Illinois (down 44 percent).
At a metro-level among cities with populations over 200,000, 138 metros saw declines in zombie foreclosures in the third quarter, led by Portland, Ore. (down 53 percent); Cleveland (down 52 percent); Phoenix (down 52 percent); and Boston (down 52 percent).
But the zombies are still lurking in many housing markets.
“Markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie foreclosure breeding ground,” Blomquist says. “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.”
In the third quarter, 16 states saw increases in owner-vacated foreclosures compared to a year ago, with some housing markets seeing zombies swell by up to 75 percent in the past year. The states that saw the largest increases were New Jersey (up 75 percent); North Carolina (up 65 percent); Oklahoma (up 37 percent); and New York (up 30 percent).