Long Island Zombie Houses

[Ryan Thomas]

Newsday has put together a report on the "Zombie House" epidemic found here on Long Island. It is a pretty interesting read.

http://data.newsday.com/projects/long-island/zombie-houses/

It seems to me, the biggest issue is that NYS is a judicial foreclosure state. The average foreclosure takes roughly 3 years to complete.

As a real estate agent, I had a short sale listed that was about 6 years behind on the loan. They purchased the property in 10/2006 and never made a single payment. As far as I know, the property is still stuck in foreclosure. I walked away from it after the loan got sold for a 3rd time.

I would assume if NYS opened the reins and allowed the foreclosure process to speed up, there would be a good opportunity for investors to pick up properties. I would also think this would keep home prices in the area depressed for a few more years.

[Account Closed]

Not an expert by any means here and my opinions could be way off, but I do live in Suffolk County so I have some views...  The real estate market here as compared with say Queens, NY hasn't really recovered since the crash of 2005-06. If you look in comparison to houses just 30-50 miles away in Queens have not only recovered, but in many cases are worth MORE than before the crash. 

Meanwhile here in Lindenhurst, NY many houses including my own are still less than what they were at the peak 2005. IMHO, a big reason for that is the cost of property taxes. I believe the majority of foreclosures here on LI are largely because of property taxes. I think it's somewhat obscured because mortgage and taxes are combined in most peoples monthly payment. In many cases the property tax cost as much and in some cases MORE each month than the mortgage itself. If taxes were proportional to real estate values (similar to queens) or any other place in the US the value of these houses would certainly rise, or at best stabilize, because people could actually afford to LIVE there.  It would also reduce investors holding costs significantly and allow new families the opportunity to get into a nicely renovated house for $250,000 without looking at a $10,000/year recurring tax that never, ever goes down.

Because of these ever increasing foreclosures we now, the Zombie house epidemic which is very concerning to me as a resident and especially at the rate of which they are appearing (7th highest in the US). Now, you could say this is an investment opportunity, and it might be, but the presence of a zombie house will stall or kill the sale of a nearby house and certainly will reduce its asking price. 

Having looked at this market a while and trying to put my toe in the water, I can say that its definitely more difficult here and expensive. Not saying impossible, but certainly not for the timid...