OK, maybe they are just sucking the life out of the housing market. But that sounds so much less exotic, and doesn’t fit in so neatly with our Halloween week theme.
I thought you might enjoy this article from The Capitol Report via Marketwatch.com. We can see the light at the end of the tunnel of the foreclosure crisis, but we’re not out of the woods yet, to mix a metaphor. There are still hundreds of thousands of homes that the banks need to get off of their books. While we here in the Bay Area are doing well, a true economic recovery will happen only when the housing market finds it footing on a national scale. Here is a short report on two categories of foreclosed homes that are holding the recovery back:
‘Vampire’ foreclosures are what’s keeping bank inventory high, analyst says
As if rising mortgage rates aren’t scary enough, analysts have identified a lurking threat to housing: “vampire” properties.
These “vampire” properties are bank-owned foreclosed homes in which prior owners continue to live, as defined by RealtyTrac, an online foreclosure marketplace.
Former owners live in 47% of U.S. bank-owned properties, according to RealtyTrac. These properties are “sucking the life out of the housing market,” said Daren Blomquist, vice president at RealtyTrac, an online foreclosure marketplace.
Vampire properties should not be confused with their creepy cousins, zombie foreclosures. According to RealtyTrac, zombie foreclosures are properties that have been vacated by the homeowner but are “languishing” in the foreclosure process. About one-in-five homes in foreclosure across the country have been vacated by the homeowner.
“The concern with these homes is that they are inevitable inventory that had been delayed from hitting the market,” Blomquist said. ”We don’t anticipate these properties will derail the housing recovery when they hit, but they will certainly take some of the steam out of the recovery.”
There are particularly high rates of “vampire” properties in Virginia, where they make up 72% of bank-owned homes and Nebraska, where they make up 68%. Many states with high shares of vampire homes have relatively short foreclosure processes and a low rate of homes with negative equity.
“Homeowners may have less time to prepare to vacate the home because of the shorter foreclosure process, but also may be more motivated to fight the foreclosure because they are more likely to have positive equity in the home,” Blomquist said.
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