Zombie Foreclosures Nearly Vanish in Hot Housing Market

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“Zombies” are no longer lurking in as many neighborhoods across the country. About 1.3 million residential properties in the U.S. are vacant—only a fraction of what is typical in the housing market, according to a new report from ATTOM Data Solutions, a real estate research firm.

Properties that are in foreclosure limbo—labeled “zombie foreclosures”—are dropping due to recent eviction moratoriums and the red-hot housing market.

The number of pre-foreclosure properties that have been abandoned in zombie status has dropped slightly, comprising 3.5% in the third quarter.

“The third quarter zombie foreclosure numbers reflect one of many measures showing how strong the U.S. housing market remains, but also one likely to face a downturn to varying degrees across the country over the coming year,” according to the report.

Double-digit annual price gains throughout most of the country have kept the housing market booming lately.

“Vacant properties in foreclosure, and the resulting potential for neighborhood decay, continue to be a non-issue overall in most of the country,” says Todd Teta, chief product officer with ATTO. “But that could easily change over the coming months as lenders are now free to take back properties from delinquent homeowners. How much, how fast, and where that happens will depend on how different banks approach the situation. Some may decide vigorously to 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.”

The largest decreases in zombie foreclosures across the country in the third quarter compared to the second quarter occurred in: 

• Maryland (down 39%)
• Massachusetts (down 26%)
• New Mexico (down 24%)
• Connecticut (down 12%)

Overall, New York continues to have the highest number of zombie properties in the third quarter, followed by Ohio, Florida, Illinois, and Pennsylvania. By metro area, the highest in the third quarter occurred in: 

• Portland, Ore. (13.7% of properties in the foreclosure process are vacant)
• Fort Wayne, Ind. (12.9%)
• Detroit, Mich. (11.9%)
• Cleveland, Ohio (11.8%)
• Honolulu (11.3%)