There are now about 127,000 zombie foreclosures, down 10 percent from a year ago, according to RealtyTrac, a foreclosure listing and analytics company. That means that one in five homes that are in the foreclosure process, that is the legal process has started but the bank has not yet repossessed the home, are vacant.
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Despite the overall drop, zombie foreclosures are rising in some of the highest-priced markets, such as Los Angeles, New York, Boston and Houston. That is because banks are moving the process more quickly in order to take advantage of rising home prices; so former owners are finally moving out. When the house is vacant, it becomes a zombie.
"They've been able to stay in that home and maybe fight foreclosure for three, four, five years, and now finally the bank is coming back with all their ducks in a row, the proper documentation, and the homeowner is seeing the writing on the wall that I'm going to have to leave and move on with my life," said RealtyTrac Vice President Daren Blomquist.
In just the last two months, banks have really ramped up on repossessing homes. These so-called REOs (bank repossessions) are now at a 17-month high. This, as the value of these former zombies rises amid strong housing demand and tight housing supply.
"The average price of a zombie foreclosure nationwide was $195,000, so we're not talking about just $20,000 or $30,000 properties here," added Blomquist.
That is good news to neighbors, like Ariel Seeley, who recently moved into a transitional Washington, D.C., neighborhood with her young family.