Zombies foreclosures are rising, might be a sign of what's to come back

Just in time for Halloween, Attom's Real Estate Foreclosure and Zombie Foreclosure report had 200,065 properties in foreclosure in the fourth quarter, and 7,612 – or 3.8% – are blank. While total zombie foreclosures fell, the percentage increased from 3.7% in the third quarter and 3% year over year.

Overall, zombie foreclosures – empty homes that are in the process of foreclosure – represent one of 13,100 U.S. residential properties.

A booming real estate market and coronavirus-induced foreclosure moratoriums have kept zombie properties in check for the past two quarters. Fannie Mae and Freddie Mac extended their moratorium to the end of 2020. However, once these restrictions are lifted, they could rise from the dead.

"Zombie foreclosures have been little of a problem in most of the country for over a year, and they're even less of a problem now," said Todd Teta, chief product officer for Attom Data Solutions, in the report. “All of that could change in a flash if foreclosures are allowed to resume or if the coronavirus puts a heavy strain on the market. But for now, things are stable, the totals have gone down, and the zombie trait rates are pretty much unchanged. "

Iowa had the highest rate of zombie foreclosures at 15.5%, followed by 12% in Kentucky and 10.2% in Missouri. At the subway level, Kansas City, Missouri, had the highest percentage at 17.2%, Peoria, Illinois, second at 16.3%, and Omaha, Neb., Third at 15%.

New York is still on the rise with 2,131 zombies, followed by Florida with 1,027 and 934 in Illinois and 836 in Ohio. Indiana tops the zombie share of investors' homes at 8.3%, followed by 6.8% in Kansas, 6.6% in Michigan, and 6.5% in Ohio.

"Some of the states with the highest rates of zombie foreclosure properties are also states hardest hit by the COVID-19 pandemic," said Rick Sharga, executive vice president, RealtyTrac. "When government bans on foreclosure activities expire, it would be no surprise if the number of defaults in these states is growing faster than in other parts of the country, and the number of foreclosure properties of zombies in these states is rising more dramatically too."

Nearly 1.56 million of the 99.5 million homes in the United States are vacant, or 1.6% of single-family homes and condos.

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