While the general foreclosure rate fell in the first quarter of 2021, the majority of states saw rising shares in zombie real estate, according to Attom Data Solutions.
In the opening quarter of 2021, a total of 175,414 apartments went into foreclosure, of which 6,677, a share of 3.8%, are vacant according to Attom Data Solutions' Vacant Property and Zombie Foreclosure Report. This declined from 200,065 and 7,612 units compared to the previous quarter and 282,800 and 8,678 units compared to the previous year.
Overall, zombie foreclosures – empty homes in foreclosure – represent one of 14,825 U.S. homes, a growing rate of 13,074 quarterly and 11,405 annually.
However, the zombie foreclosure rate rose in 29 states from the fourth quarter. Kansas saw the largest growth, increasing 4.4 percentage points from 16.3% to 20.7%. Next came Arkansas from 3.1% to 6.6%, then Minnesota rose from 4.7% to 7.1%.
According to Todd Teta, chief product officer at Attom Data Solutions, the dwindling zombie foreclosure numbers contrast with the Great Recession when abandoned lots were scattered across many communities. While zombie foreclosures are on the decline and are not currently a problem, depending on the economy, this can become a problem if the protection of the CARES Act ends.
"The trend remains on thin ice as foreclosures are temporarily put on hold and the market is still at risk of another wave of zombie traits if the moratorium is lifted," Teta said in the report.
Oklahoma, Tennessee, Mississippi and Kansas had the highest vacancy rate in the first quarter at 2.5%. At the subway level of 100,000 or more residents, Peoria, Illinois had the highest rate at 15.5%, followed by South Bend, Indiana, at 15.2%, and Cleveland, at 12.3%.
New York maintained its lead in zombie properties, totaling 2,064 for the first quarter. Florida followed with 926, then 759 in Illinois. Indiana leads the zombie share of investors' homes at 7.5%, followed by 6.5% in Kansas and 5.9% in Mississippi.
The handover of the vacant housing stock could be a possibility to relieve the squeezed inventory of the country.
"If there is an abandoned property, we need to bring it back to market for both the neighborhood good and supply shortages," said Ed DeMarco, president of the Housing Policy Council, in an interview. "We shouldn't artificially keep the offer off the market if foreclosure doesn't conflict with COVID issues."
Of the nearly 99 million homes in the US, 1.45 million are vacant, equivalent to 1.5% of single-family homes and condominiums.