IRVINE, CA—The number of zombie foreclosures—properties that have begun the foreclosure process but have never been foreclosed and the homeowner has vacated the property—has decreased 7% from the first quarter of the year and has decreased 16% from second-quarter 2013, according to RealtyTrac. The foreclosures are one of the lingering legacies of the recent housing crisis, a byproduct of lengthy foreclosure timelines and changing state foreclosure statues, but they are on a downward spiral.
One in every five foreclosures has been vacated by the homeowner before the foreclosure is completed, a total of 141,406 zombie foreclosures nationwide in Q2, totaling 21% of total properties in foreclosure, RealtyTrac reports. There were 24 states bucking the trend with an increasing number of zombie foreclosures from the previous quarter, plus DC, and 10 states plus DC saw an increase from a year ago, including New Jersey, New York and Maryland.
States with the most zombie foreclosures include Florida, which accounted for more than one-third of all zombie foreclosures, New York, New Jersey, Illinois and Ohio. The states with the zombies that had been in foreclosure for the longest average time were New York, Florida, New Jersey, Illinois and Hawaii. Financial institutions listed as the beneficiary on the foreclosure documents with the most zombie foreclosures were Wells Fargo, Bank of America, Chase and US BankCorp.
Daren Blomquist, VP with RealtyTrac, tells GlobeSt.com, “What I found most interesting about our analysis this time is that we looked at the potential impact of these zombie foreclosures on local property tax revenue. Our estimates found that these zombie properties nationwide represent more than $400 million in potentially lost property tax revenue, much of that likely being unpaid. States with the most potentially lost property tax revenue from zombie foreclosures are Florida ($113 million), New York ($102 million), New Jersey ($79 million), and Illinois ($55 million).”
Blomquist adds that what this means is that zombie foreclosures really represent a triple threat to local communities. “First, to the homeowners abandoning these properties they represent a liability and responsibility the homeowner may not even be aware of; second, they are typically dragging down the home values of surrounding homes in the neighborhood; and third, they represent a potential loss of property tax revenue to local governments.”
As GlobeSt.com reported earlier this week, US residential properties, including single-family homes, condominiums and townhomes, sold at an estimated annual pace of nearly 5.2 million in May, a number that is virtually the same as April and representing an increase of less than 1% from May 2013, according to a report from RealtyTrac. However, median home prices increased 6% in May as compared to April and rose 13% from May 2013, representing the biggest annual increase since US home prices bottomed out in March 2012.