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The number of vacant homes that are in some stage of the foreclosure process ticked upward for the third straight quarter to a level that’s 27.4 percent higher than the year before, according to a new report.
But investors looking for off-market deals on distressed properties shouldn’t expect a huge selection of homes to choose from.
Just one in every 13,000 residential properties nationwide is considered a “zombie” property, or a home that is in the early stages of foreclosure that has been abandoned by its owner. That’s according to the latest report on zombie properties from Attom, a real estate data firm that tracks properties nationwide.
Homes have continued to slowly enter the foreclosure process after the bulk of government protections brought on by the COVID-19 pandemic expired in the middle of 2021, the report said.
“The government’s foreclosure moratorium dramatically reduced the number of properties in foreclosure,” said Rick Sharga, executive vice president of market intelligence at Attom. “Vacant and abandoned properties were among the few homes that could still be foreclosed on during the moratorium, so the number of zombie properties shrank as well. Now that the foreclosure ban has been lifted, we’re likely to see a gradual return to pre-pandemic levels.”
Just under 1.3 million properties are currently vacant in the U.S., according to Attom’s data. About 284,000 properties are in the foreclosure process, which is up 27.4 percent compared to the same period last year.
Of the properties that are in the foreclosure process, 7,722 are considered zombies or in pre-foreclosure and abandoned by owners. That number is up 3.9 percent from a year before and is the third straight quarter that saw an increase.
That number is still well below historical figures.
“Low vacancy rates are also a major factor in there being few zombie homes,” Sharga said. “And with demand from both traditional homebuyers and investors still relatively strong, and the inventory of homes for sale still very low, vacancy rates for residential homes is about as low as it’s ever been.”
The vacancy rate for all residential properties in the U.S. has dropped for three quarters in a row. It now stands at 1.26 percent (one in 79 properties), down from 1.28 percent in the third quarter of 2022 (one in 78) and from 1.33 percent in the fourth quarter of last year (one in 75).