States With The Most Zombie Homes

September 12, 2013 by Mike Sauter

112859140There 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.

7. South Carolina
> Homes in foreclosure: 18,795
> Pct. foreclosed homes vacant: 20%
> Foreclosure rate: 1/813

Approximately one in five of the 18,795 homes in foreclosure in South Carolina are vacant. In some of the state’s metro areas, the foreclosure vacancy rate is even higher. In Greeneville, SC, 22% of foreclosed homes are zombie properties. Last month, there were 1,451 new foreclosures started in the state, while just 590 foreclosures were completed. Like many other states with a high foreclosure vacancy rate, home prices in South Carolina are relatively low. The median sales price in July was just $138,000, compared to a national median price of $174,500.

6. Arizona
> Homes in foreclosure: 10,211
> Pct. foreclosed homes vacant: 21%
> Foreclosure rate: 1/947

After a severe decline during the first few years of the housing collapse, Arizona home prices improved more than most states in the last three years. Still, considering prices remain down by 22% compared to the beginning of 2008, the state’s housing market still has a ways to go. Over 2,000 homes in foreclosure in Arizona are vacant, most of which are located in the Phoenix-Mesa-Scottsdale metropolitan region. There are 7,404 foreclosed homes in the Phoenix metro area, and 1,615 of them have been abandoned by their owners. On the bright side, since last year, foreclosure rates have fallen by more than 62% in the state.

Also Read: The Countries with the Most Multimillionaires

5. Maryland
> Homes in foreclosure: 13,040
> Pct. foreclosed homes vacant: 21%
> Foreclosure rate: 1/609

A large portion of Maryland’s zombie homes are in the Baltimore region, in that metropolitan area, nearly 25% of over 7,000 foreclosed homes are vacant.Since August of last year, foreclosures in Maryland have increased by 164.58%, a bad sign for its housing market. The state had over 2,000 reported foreclosure starts in August, the eighth-most in the country. At the same time, just 306 completed foreclosure. Part of this may be the result of the state’s slow foreclosure process, which takes an average of 583 days, the 14th-longest period in the country. Unlike most of the states with high rates of zombie homes, Maryland home prices are higher. The median home price in the state in July was $235,000, well above the national median of $174,500.

4. Florida
> Homes in foreclosure: 237,187
> Pct. foreclosed homes vacant: 23%
> Foreclosure rate: 1/383

Since the beginning of 2008, home prices in Florida have fallen by more than a quarter, more than every other state except Nevada. Homosassa Springs, Florida, has the highest rate of foreclosure vacancies in the country among large metro areas, with over 40% of foreclosed homes vacant. The state has more than 50,000 vacant foreclosed homes, over a third of the total for the country. Second-place Illinois has only 15,585 zombie homes. The state’s long foreclosure process has likely contributed to the number of homes remaining in foreclosure, as well as the percent of homeowners opting to give up on their foreclosed property. Florida takes 907 days on average for home to be foreclosed, the third longest process in the country.

3. Georgia
> Homes in foreclosure: 12,587
> Pct. foreclosed homes vacant: 24%
> Foreclosure rate: 1/877

Like many of the states with the most zombie homes, Georgia was also among the states hit hardest by the housing market collapse. After one of the largest declines in the country over the last five years, the median home price in Georgia is $134,900, well below the national median, and 10th-lowest in the country. Zombie homes are also common in the state’s metropolitan areas. Of the 9,300 or so foreclosed homes in Atlanta metropolitan area, more than 2,100 have been vacated by their owners.

2. Nevada
> Homes in foreclosure: 10,191
> Pct. foreclosed homes vacant: 29%
> Foreclosure rate: 1/359

Before the recession, Nevada’s real estate and construction industries were doing very well, fueling a fast-growing economy. Now, several years after the housing market collapse, nearly 30%, or 3,000, of Nevada’s many foreclosed homes are vacant, and the state’s unemployment rate is the highest in the country. Home prices have been rising more rapidly in Nevada than in any other state, improving 21.1% in the last year, but the state still has a way to go. The vast majority of the state’s 2,398 zombie homes are in Las Vegas.

Also Read: States with the Biggest Drops in Foreclosures

1. Indiana
> Homes in foreclosure: 16,618
> Pct. foreclosed homes vacant: 30%
> Foreclosure rate: 1/660

Over 5,000 of the 152,033 zombie homes in the U.S. are located in Indiana. Those homes represent 30% of all foreclosed homes in the state. The number of foreclosed homes that have been abandoned is even higher in some of Indiana’s metropolitan areas, including the Indianapolis-Carmel area, where 32% of the region’s 7,000 foreclosed homes are vacant. Foreclosures in the state usually go through a court, lengthening the process and giving owners more time to abandon their property. As of mid-2013, it took 618 days on average to foreclose on a home, the 11th longest period in the country.

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