There are more than 770,000 homes in foreclosure in the U.S. According to the latest data provided by RealtyTrac, roughly one in five of these, over 150,000 in all, has been abandoned by its owners, but remains unclaimed. These properties are referred to by the industry as “zombie” homes.
RealtyTrac provided 24/7 Wall St. with the latest foreclosure data by state, including the number of homes in foreclosure and the proportion of those homes that are vacant. In some states, the problem of zombie homes is particularly severe. In Indiana, for example, roughly 30% of the 16,618 foreclosed homes have been abandoned. 24/7 Wall St. identified those states with more than 10,000 homes in foreclosure, and at least a one-in-five foreclosure vacancy rate. These are the seven states with the most zombie homes.
A higher proportion of foreclosed homes in these states have been abandoned because the homes have been in the foreclosure process for much longer. A longer processing period gives homeowners more time to leave their property.
The average U.S. foreclosure ending in the second quarter of this year took 526 days to process. In some of the states with the most zombie homes, the average processing period was much higher. In Florida, the average foreclosure took 907 days to complete.
Longer processing periods can be caused by state laws, including requirements for court proceedings and filing processing time. Homes may be held in limbo longer because the price is too low.
According to RealtyTrac Vice President Daren Blomquist, many of these states have very low home prices. Indeed, as of July, home prices in the majority of these states were below the national median of $174,500. Vacant homes in foreclosure “tend to be much older homes that are low value, there’s not a lot of motivation for the owners to try to save those homes,” said Blomquist.
Homeowners are also likely to leave before the foreclosure process is over because of high unemployment rate. In states with healthy economies, even homeowners facing foreclosure are more likely to stay and look for jobs.
On the other hand, in states like Nevada, which had the highest unemployment rate in the country, residents are more likely to abandon their homes and look for work elsewhere. All of the states with the most zombie homes had unemployment rates higher than the national rate in July.
“One of the things that could be affecting these states is that in markets where the economy was really suffering, you tend to see people move away from those markets” explained Blomquist.
To identify the states with the most zombie homes, 24/7 Wall st. reviewed the states with at least 10,000 homes in foreclosure at last count, based on current data provided by RealtyTrac. In the seven states on our list, at least 20% of the homes in foreclosure were vacant. In addition to foreclosure vacancy data, RealtyTrac provided the number and rate of housing units in foreclosure for August, as well as median home prices for July and average times to foreclosure as of Q2 2013. We also reviewed historical home price declines and projections from Corelogic-Case Shiller’s home price index, as well as July 2013 unemployment rates from the U.S. Bureau of Labor Statistics. All data used was the most recent available.
These are the states with the most zombie homes.