Zombie foreclosures rise in most states, report finds

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The number of homes abandoned during the foreclosure process, known as "zombie foreclosures," increased in the majority of states this quarter, an industry report found.

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Zombie properties rose quarter over quarter in 38 states and the District of Columbia, according to Attom's latest Vacant Property and Foreclosure Report. 

Out of the 104.9 million residential properties in the United States, 245,376 were in the foreclosure process in the second quarter. Of those, 8,312 properties, or 3.4%, were zombies, a slightly higher percentage than the 3.3% recorded in the first quarter and second quarter a year ago, the report showed.

"The increase in zombie foreclosures across most states may reflect a foreclosure market that is slowly returning to more normalized levels," said Rob Barber, CEO of Attom, in a press release Wednesday. "At the same time, overall vacancy rates remain relatively steady nationwide, while zombie foreclosures still represent only a small share of homes in the foreclosure process."

Nearly 1.4 million homes, or 1.3% of residential properties in the United States, were vacant in the second quarter, the same rate as the previous quarter and second quarter of last year, the report found.

Vacancy rates for homes owned by institutional investors more than doubled the national average at 3.5%. Out of the 25.1 million investor-owned homes, 890,135 were vacant.

Which states saw the largest increases in zombie properties?

Among states with at least 100 zombie properties, the largest quarterly jumps were in Georgia, up 98% to 101, North Carolina, up 67.2% to 102, Indiana, up 42% to 294, Iowa, up 35.5% to 126, and South Carolina, up 15.4% to 150.

Several Midwestern metros also accumulated double-digit zombie rates. Of the 138 metros with sufficient data to analyze, Cedar Rapids, Iowa, Wichita, Kansas, Youngstown, Ohio, Cleveland and Akron, Ohio, posted the highest rates, ranging from 10.6% and 13.2%, according to the report.

Only two states with at least 50 zombie properties saw their numbers decrease: Washington, down 13.1% to 53, and New York, down 2.2% to 1,352. Grand Rapids, Wyoming, was the only metro without a zombie property. Trenton, New Jersey, Atlantic City, New Jersey, Provo, Utah, and Santa Rosa, California, each had a zombie rate no higher than 0.5% as well.

Southern and Midwestern states also posted the highest vacancy rates, led by Oklahoma and Kansas at 2.4%. Alabama, West Virginia and Missouri also cracked the top five. The four states with the lowest vacancy rates, New Hampshire at 0.3%, Vermont at 0.4%, New Jersey at 0.5% and Connecticut at 0.5%, were all in the Northeast, the report found.