Residential Real Estate News
Foreclosure Activity Rises in U.S. as Vacant Zombie Properties Dip in Early 2022
According to ATTOM Data's first-quarter 2022 Vacant Property and Zombie Foreclosure Report, 1.4 million (1,354,579) residential properties in the United States sit vacant. That represents 1.4 percent, or one in 73 homes, across the nation.
The report also reveals that 229,864 residential properties in the U.S. are in the process of foreclosure in the first quarter of this year, up 3 percent from the fourth quarter of 2021 and up 31 percent from the first quarter of 2021. The increase marked the second straight quarter that the count of pre-foreclosure properties has gone up since a nationwide moratorium on most lender takeovers of delinquent mortgages was lifted at the end of July.
Among those pre-foreclosure properties, 7,363 sit vacant in the first quarter of 2022, down quarterly by 0.9 percent but up annually by 10.3 percent. The portion of pre-foreclosure properties that have been abandoned into zombie status dropped slightly from 3.3 percent in the fourth quarter of 2021 to 3.2 percent in the first quarter of this year.
Despite the year-over-year increase, zombie foreclosures continue to represent only a miniscule portion of the nation's total stock of 98.8 million residential properties. Just one of every 13,424 homes in the first quarter of 2022 are vacant and in foreclosure. That's slightly better than ratio of one in 13,292 during the fourth quarter of 2021 although worse than the one-in-14,825 level in the first quarter of last year.
"Even with foreclosure activity rising, it doesn't seem likely that we'll see a significant increase in the number of zombie properties," said Rick Sharga, executive vice president of RealtyTrac, an ATTOM company. "Zombie status is most likely during a long, protracted foreclosure process, but with $23 trillion in homeowner equity, and demand outstripping supply, most distressed borrowers should be able to sell their home at a profit before the process drags on."
The first-quarter zombie foreclosure trend remains among a host of measures showing how the decade-long surge in the U.S. housing market continues both in spite and because of the ongoing Coronavirus pandemic that damaged the U.S. economy after hitting in 2020. Home prices in much of the country have soared more than 10 percent over the past year. Seller profits commonly exceed 40 percent. And a tour of most neighborhoods would not turn up a single home in the foreclosure process sitting vacant and exposed to vandalism or decay.
That has happened as a glut of home buyers has flooded the market, largely driven by historically low mortgages rates and a desire by many to flee congested virus-prone areas for the relative safety and larger spaces offered by houses or condominiums. Prices continue to soar as buyers chase a tight supply of homes for sale, including those in foreclosure.
However, the number of zombie foreclosures could rise this year amid the recent increase in banks and other lenders pursuing homeowners who have fallen behind on mortgages payments during the pandemic. Pre-foreclosure numbers have jumped since the federal government lifted the moratorium, imposed in 2020, on lenders taking back properties. Employment is rising as the U.S. economy slowly recovers from the pandemic's effects, which should help tamp down foreclosures. But an estimated 1.5 to 2 million homeowners were in some kind of forbearance when the moratorium ended.
"The problem of empty properties in foreclosure and the blight they can cause still remains off the table almost everywhere in the country. You'd need to search far and wide in most communities to find even one," said Todd Teta, chief product officer with ATTOM. "But the rosy picture is again in danger. That's because foreclosure activity has started to kick upward since the moratorium was lifted. While it's unlikely that a tidal wave of zombie properties is headed our way as the economy improves, the number seems likely to head up to some degree this year. It will depend on how fast the courts process cases and how many delinquent homeowners can catch up on mortgages."
Zombie foreclosures down quarterly but up annually
A total of 7,363 residential properties facing possible foreclosure have been vacated by their owners nationwide in the first quarter of 2022, down from 7,432 in the fourth quarter of 2021 but up from 6,677 in the first quarter of 2021. The number has decreased, quarter over quarter, in 25 states. But it is up, year over year, in 30.
Among states with at least 50 zombie foreclosures during the first quarter of this year, the biggest decreases from the fourth quarter of 2021 to the first quarter of 2022 are in Michigan (zombie properties down 29 percent, from 76 to 54), New Jersey (down 18 percent, from 337 to 275), Illinois (down 11 percent, from 758 to 676), Oklahoma (down 10 percent, from 104 to 94) and North Carolina (down 8 percent, from to 146 to 134).
While the numbers remain low, the biggest increases from the first quarter of 2021 to the first quarter of 2022 among states with at least 50 zombie foreclosures during the first quarter of this year are in Connecticut (zombie properties up 520 percent, from 10 to 62), Iowa (up 207 percent, from 43 to 132), Maryland (up 182 percent, from 44 to 124), Maine (up 174 percent, from 23 to 63) and Nevada (up 119 percent, from 31 to 68).
Largest zombie property counts remain in Northeast and Midwest
Six of the seven states with the most zombie foreclosures again are in the Northeast and Midwest. New York continues to have the highest number of zombie properties (2,074 the first quarter of 2022), followed by Ohio (942), Florida (916), Illinois (676) and Pennsylvania (356).
"If we do see a jump in the number of zombie properties, it will likely happen in states like New York, Illinois, and Florida," Sharga noted. "Judicial foreclosures in these states often get delayed by court backlogs, and the foreclosure process has sometimes dragged on for over 1,000 days."
Overall vacancy rates down over the past year in 38 states
The vacancy rate for all residential properties in the U.S. has increased to 1.37 percent in the first quarter of 2022 (one in 73 properties). That's up from 1.33 percent in the fourth quarter of 2021 (one in 75), but remains down from 1.46 percent in the first quarter of last year (one in 68).
Overall vacancy rates have decreased in 38 states from the first quarter of 2021 to the first quarter of 2022. States with the biggest annual drops are Oregon (down from 1.9 percent of all homes in the first quarter of 2021 to 1.1 percent in the first quarter of this year), Mississippi (down from 2.5 percent to 1.8 percent), Tennessee (down from 2.5 percent to 1.9 percent), Wisconsin (down from 1.4 percent to 0.8 percent) and Minnesota (down from 1.5 percent to 1 percent).
Other high-level findings from the first-quarter-of-2022 data:
- Among 163 metropolitan statistical areas in the U.S. with at least 100,000 residential properties and at least 100 properties facing possible foreclosure in the first quarter of 2022, the highest zombie rates are in Wichita, KS (14.8 percent of properties in the foreclosure process are vacant); Springfield, MO (14.7 percent); Peoria, IL (11.6 percent); Fort Wayne, IN (10.9 percent) and Cleveland, OH (10.8 percent).
- Aside from Cleveland, the highest zombie-foreclosure rates in major metro areas with at least 500,000 residential properties and at least 100 homes facing foreclosure in the first quarter of 2022 are in Indianapolis, IN (9.7 percent of homes in the foreclosure process are vacant); Portland, OR (9.6 percent); Baltimore, MD (8.1 percent) and Pittsburgh, PA (6.8 percent).
- Among the 27.7 million investor-owned homes throughout the U.S. in the first quarter of 2022, about 935,200 are vacant, or 3.4 percent. The highest levels of vacant investor-owned homes are in Indiana (7.1 percent), Kansas (6 percent), Oklahoma (5.5 percent), Ohio (5.2 percent) and Alabama (5.2 percent).
- Among the roughly 3,100 foreclosed, bank-owned homes in the U.S. during the first quarter of 2022, 14.4 percent are vacant. In states with at least 50 bank-owned homes, the largest percentages are in Alabama (21.6 percent vacant), Michigan (20.8 percent), Georgia (20.2 percent), Ohio (19.9 percent) and Illinois (19.7 percent).
- The highest zombie-foreclosure rates among counties with at least 500 properties in the foreclosure process during the first quarter of 2022 are in Broome County (Binghamton), NY (12.9 percent of pre-foreclosure homes are empty); Cuyahoga County (Cleveland), OH (12.5 percent); Pinellas County (Clearwater), FL (9.7 percent); Onondaga County (Syracuse), NY (9 percent) and Oneida County, NY (outside Syracuse) (8.2 percent).
- The lowest zombie rates among counties with at least 500 properties in foreclosure in the first quarter of 2022 are in Mecklenburg County (Charlotte), NC (0.3 percent of pre-foreclosure homes are empty); Mercer County (Trenton), NJ (0.3 percent); San Diego County, CA (0.4 percent); Atlantic County (Atlantic City), NJ (0.4 percent) and Lexington County (Columbia), SC (0.6 percent).
- Among 419 counties with at least 50,000 residential properties, those with the largest portion of total homes in zombie foreclosure status in the first quarter of 2022 are Broome County (Binghamton), NY (one of every 614 properties); Cuyahoga County (Cleveland), OH (one in 901); Suffolk County (eastern Long Island), NY (one in 1,132); Peoria County, IL (one in 1,283) and Albany County, NY (one in 1,383).
