Vampire REOs and Zombie Foreclosures
star in a brief report issues by RealtyTrac this morning. These "Monsters of the Housing Market," the
company says, at least partially explains why so many bank-owned homes are not
available for sale and why so many other properties are standing vacant.
Vampire REO is the company's term for
homes that, while foreclosed and technically owned by the bank, are still
occupied by their former owners. RealtyTrac
said it found that 47 percent of bank-owned homes nationwide are still occupied
by the former owner.
"On the surface," it says, "these
properties will often look like normal, non-distressed homes, but beneath the
surface they represent a shadow inventory that is becoming more imminent as
rising home prices motivate banks to sell off these homes to try to recoup
their losses on soured loans."
The data makes no assumption about the reason
for this. Are the banks so overloaded
they have been unable to process evictions?
Are there legal issues delaying or preventing evictions? Is it possible that the banks and the
previous owners have reached formal temporary or permanent lease
agreements? If the latter is widespread,
might it indicate quite the opposite of a shadow inventory and a mutually
beneficial accommodation for the bank and the displaced homeowner?
Vampire REOs are more prevalent in some
states and metros than other. The
graphic below indicates vampire rates in some areas that are higher than the
national average of 27 percent. For
example, in Miami 64 percent of REOs are classified as "Vampire"; in Phoenix it
is 46 percent and in Las Vegas 40 percent. Though many of these metros were especially
hammered by foreclosures, some did not suffer disproportionately so the uneven
distribution might also indicate some prevailing local factors.
A Zombie Foreclosure, on the other hand,
is a home that has been vacated by the owner before a foreclosure has been
completed. A recent update by RealtyTrac shows that about
20 percent of homes in the process of foreclosure are vacant.
Of the 20 metropolitan areas
in the graph below, eight are in Florida, a state with notoriously long
foreclosure timelines and large foreclosure backlogs. New York is generally noted as the state where
it takes the longest time to foreclose.
These Zombie Foreclosures might indicate that many homeowners expected
their situations to be resolved long ago and have moved on with their lives.