Are There Any Zombie Homes In Your Neighborhood Or Your Portfolio?

Zombie homes aren’t inhabited by zombies, although that might fascinate the many fans of zombie books, movies and online games. No, zombie homes are empty houses in the process of a foreclosure.

Michael Gerrity posted the following about vacancies and zombies on WorldPropertyJournal.com:

“Based on RealtyTrac's Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report, nearly 1.4 million (1,398,046) U.S. residential properties (1 to 4 units) representing 1.6 percent of all residential properties were vacant as of May 2016, up 2.7 percent from the previous quarter when 1,361,628 U.S. residential properties were vacant.

“The report also shows that 19,187 U.S. residential properties actively in the foreclosure process were vacant (zombie foreclosures), representing 4.7 percent of all residential properties in foreclosure -- down 3.1 percent from the previous month and down 30.1 percent from a year ago.”

The way I read it, the number of vacant homes has increased, but the number of zombie foreclosures has decreased. Maybe enough horror stories have circulated, and homeowners have started to understand that a threat of foreclosure doesn’t mean they should rent a van and move out immediately.

Sometimes called a zombie title or a zombie property, zombie homes result when the homeowner is still in title, but is no longer living in the property or paying the mortgage, taxes and insurance on it. When the lender hasn’t completed the foreclosure process to regain legal title, essentially the property is in legal limbo. Nobody is home, literally and figuratively.

And as we all know, bad things can happen when nobody’s home. Property damage is one thing, but here are other possible consequences for homeowners in title, when they choose to abandon their home before the lender takes title:
  1)  Unpaid property taxes can be levied, along with increasing penalties until paid.
  2)  Homeowner’s associations can file lawsuits to collect unpaid fees and assessments.
  3)  Counties and municipalities can fine property owners in title for trash pickup, mowing and housing code infractions.
  4)  Civil actions can be filed, resulting in arrest warrants and jail time.

Gerrity also posted about vacancies in general: “A total of 1.1 million (1,055,725) U.S. residential investment properties were vacant as of May 2016, 75 percent of the all vacant properties nationwide and representing 4.4 percent of all investment properties.”

Don’t miss that last part – 75% of vacant houses in the U.S. are owned by investors. As of last month, May 2016, over 1 million residential investment properties were sitting vacant, not generating rental income or covering expenses. Naturally, these vacancies are concentrated in certain areas, with Michigan in the lead by a mile.

World Property Journal -Investment properties account for 75 percent of all vacant homes. A total of 1.1 million (1,055,725) U.S. residential investment properties were vacant as of May 2016, 75 percent of the all vacant properties nationwide and representing 4.4 percent of all investment properties.