The number of zombie foreclosures dropped 7% nationwide in the third quarter of 2021, but this figure could increase as the federal moratorium comes to a close, according to ATTOM’s 2021 Vacant Property and Zombie Foreclosure Report.
The nation’s total stock of residential properties is 98.4 million, and the portion represented by zombie foreclosures remain miniscule. Currently, zombie foreclosures comprise only one out of every 13,060 residential properties in the U.S., representing 1.4% or one in every 74 homes across the nation. That figure has decreased significantly from the previous quarter (one in every 12,256 homes) and from the third quarter last year (one in every 12,486 homes).
A total of 215,495 properties are in the process of being foreclosed in the third quarter of 2021, down 3.7% from the previous quarter and down 0.2% from the third quarter of 2020. Among these pre-foreclosed properties, 7,538 sit vacant in the third quarter of this year, down quarterly by 6.7% and annually by 5.3%.
The vacancy rate for all residential properties in the U.S. declined to 1.35% in the third quarter from 1.42% in the previous quarter and 1.58% in the third quarter last year. States that had the biggest quarterly decrease in vacancy rates were Oregon, Maryland, Mississippi, and Minnesota.
These numbers reflect a strong U.S. housing market, despite a decade-long home price boom and the economic damage stemming from the coronavirus pandemic; however, the number of foreclosures is certain to increase after the federal government lifted the 15-month moratorium. The moratorium, enforced by the Center for Disease Control (CDC), prevented lenders from taking back properties from delinquent homeowners. An estimated 1.5 million to 2 million homeowners were in forbearance when the moratorium ended in July 2021.
“Vacant properties in foreclosure, and the resulting potential for neighborhood decay, continue to be a non-issue overall in most of the country. But that could easily change over the coming months as lenders are now free to take back properties from delinquent homeowners,” said Todd Teta, chief product officer with ATTOM. “How much, how fast and where that happens will depend on how different banks approach the situation. Some may decide to vigorously pursue foreclosures to recoup losses from the pandemic while others give homeowners more time to get back on their feet. But it's hard to imagine that zombie foreclosures will continue to be so few and far between across the national landscape.”
Overall, zombie foreclosures are down in 31 states. In states with at least 50 zombie foreclosures in the third quarter of 2021, the biggest quarterly decreases were in Maryland (zombie foreclosures down 39%), Massachusetts (down 26%), New Mexico (down 24%), Connecticut (down 12%), Florida (down 11%) and Maine (down 11%).
The largest count of zombie properties comes from the Northeast and Midwest regions of the country. New York has the highest number of zombie properties in the third quarter (2,053), followed by Ohio (939), Florida (912), Illinois (805) and Pennsylvania (366).
Rick Sharga, executive vice president of RealtyTrac, an ATTOM Company, explained why we might see more zombie foreclosures as Halloween approaches: “First, the CFPB has authorized lenders to pursue foreclosure proceedings on vacant and abandoned homes now that the government's moratorium is over. Second, they've also given the go-ahead to re-start the foreclosure process on loans that were already 120 days delinquent prior to the moratorium, and it's not unlikely that over the past 15 months many of those financially-distressed homeowners have vacated their properties.”
ATTOM will continue to track and analyze zombie foreclosure activity, nationwide, to measure the effects of ending the federal moratorium. To see more of ATTOM’s vacancy data, please visit: https://www.attomdata.com/solutions/marketing-lists/.
