Number Of Zombie Properties Increase In 30 US States

The number of zombie homes – vacant properties abandoned by owners during the foreclosure process – rose in 30 U.S. states and the District of Columbia in the second quarter of this year from the previous quarter, real estate data analytics company ATTOM said in a May 29 statement.

Zombie homes, which can fall into disrepair and negatively impact the value of other properties in the neighborhood, are a sign of distress in the housing market and the broader economy.

As Naveen Athrappully reports for The Epoch Times, among states with at least 50 zombie homes, North Carolina saw the largest percentage increase in these properties year-over-year, with their numbers rising by 52.5 percent during this period.

This was followed by Iowa and Texas, both seeing an over 50 percent jump in zombie properties. South Carolina and Kansas were the next on the list.

According to ATTOM’s analysis, Peoria County in Illinois ranked at the top in the list of U.S. counties with the highest zombie foreclosure rates.

Broome County in New York came in second, followed by Cuyahoga County in Ohio, Baltimore City County in Maryland, and Indiana’s Marion County.

On a positive note, things looked better from a nationwide perspective, with only one out of every 14,207 being zombie properties in Q2, which ATTOM said was a low rate, indicating the strength of the post-pandemic U.S. housing market.

“Thankfully, we’re not seeing a lot of homes sitting vacant due to pending foreclosures, which is good for families, neighborhoods, and the market,” said Rob Barber, CEO of ATTOM. “However, foreclosure filings have shown a recent uptick—with April seeing a 14 percent increase compared to the same month last year.”

“So far, buyers seem to be scooping up these repossessed homes relatively quickly, so they aren’t sitting empty,” he added. “Nobody wants to see a return to the days of the 2008 housing crisis when vacant, blighted homes were common in many parts of the country.”

Meanwhile, the number of property foreclosures had risen by 11 percent in the first quarter of this year from the previous quarter, breaking away from the trend of three consecutive quarterly declines, ATTOM said in an April 11 statement.

“While levels remain below historical averages, the quarterly growth suggests that some homeowners may be starting to feel the pressure of ongoing economic challenges,” Barber said.

“However, strong home equity positions in many markets continue to help buffer against a more significant spike in distress.”

Consequences of Zombie Properties

According to a June 18 post by financial services company Rocket Mortgage, zombie homes can negatively affect homeowners even after they abandon the properties.

For instance, the owner may continue to owe property taxes that could end up becoming a tax lien. Similarly, the zombie property may continue accruing homeowners’ association fees, which, if unpaid, could result in a lawsuit.

“These consequences can result in a major hit to your credit score, among other financial and legal implications. This could prevent you from moving on with your life and regaining your financial footing,” said the post.

“Abandoned homes can fall into disrepair and affect the surrounding property values. A vacant property can become a shelter for squatters and attract vandalism or other crimes. This could drive away potential new residents and force current ones to reconsider whether their neighborhood is still safe to live in.”

Lawmakers are taking action to tackle the issue of zombie properties putting unnecessary burdens on people.

In mid-May, the Connecticut Senate passed SB 1336, a bill seeking to protect homeowners having “zombie mortgages,” the Connecticut Senate Democrats said in a May 15 statement.

The bill, co-sponsored by state Sen. Pat Billie Miller, places a statute of limitations on lenders regarding the collection of long-dormant second loans on properties, also known as zombie mortgages.

It prohibits lenders from starting foreclosure proceedings on secondary mortgages 10 years after the scheduled final loan payment date or 10 years after the lender stopped communicating with the borrower.

“This bill protects our homeowners from foreclosure threats based on debt that’s been dormant for more than a decade,” Miller said. “The change puts Connecticut in alignment with national trends as states across the country move to shield consumers from the delayed impact of predatory lending practices.”

“No one making reliable payments on their primary mortgage should face foreclosure because someone made an opportunistic decision to resurrect a secondary loan, years after deciding that collection wasn’t worth the effort when property values plummeted in the aftermath of the 2008 financial crisis.”

The bill passed the House and Senate, and now needs to be signed by the state governor.