One of the long lasting vestiges of the Great Recession and the ensuing foreclosure crisis is the so-called zombie foreclosure. Unlike a typical foreclosure, which attracts purchase activity due to its reduced price, a zombie foreclosure is a home which generally continues to sit, vacated, for months or even years after the previous residents have been evicted.
Zombie foreclosures represent a problem for neighborhoods all over the country for several reasons. The primary reason is that when a home remains unoccupied for a long period of time, home values in the surrounding areas can become unnecessarily restricted, hampered by the foreclosed property’s stagnant value. Additionally, zombie foreclosures are often in bad shape due to neglect and vandalism, further eroding any value the home may have. Finally, long-term vacant homes have a tendency to attract vagrants, who often take refuge in the zombie foreclosures, increasing the risk of theft and violence the neighborhood.
According to real estate monitoring firm RealtyTrac, there are currently 152,000 zombie foreclosures in neighborhoods across the United States. Even more surprisingly, the homes have been sitting vacant for an average of 1,031 days. That’s the equivalent of nearly three years in which these homes have not received even routine maintenance. One of the reasons zombie homes are able to sit on the market for so long is that many of the homes are in more or less run-down areas, and the cost to rehabilitate them exceeds their actual values. In looking for a solution to the situation cities, such as Cleveland, Ohio, are demolishing the homes instead of allowing them to continue to sit uninhabited.
Despite the phenomenon of zombie foreclosures, the country is coming out of the foreclosure crisis. Experts say that in February the overall foreclosure filing rate was down 27 percent year-over-year.
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