“Zombies” is the term used to describe empty homes in
the foreclosure process which have been abandoned by their owners.
According to the 3Q 2014 Zombie Foreclosure Report from
Realty Trac, Broward County had 3,437 owner vacated properties at some stage in
the foreclosure process, which shows a decline of 19 percent from the third quarter
of 2013.
Palm Beach County had 2,749 so-called Zombie Foreclosures
in the same period, down 35 percent.
Abandoned homes supposedly impact the real estate
market negatively because they are not being maintained, and as a result can drag
down home values in the neighborhood.
Nationally, Zombie Foreclosures declined almost 23% as
the distressed property crisis continues working through the inventory of toxic
mortgages issued through the housing bubble which lead to the real estate crash
and economic recession. Across the United States RealtyTrac reports 117,298
abandoned homes in the third quarter of this year, which is down from 152,033.
Among metros, the reporting area of Miami, Fort
Lauderdale and Pompano Beach ranked second in the nation with a total of 9,869
Zombies. Only the New York area, encompassing Northern New Jersey and Long
Island, reported more, with 13,366 abandoned homes.
Florida led all states with 35,913 Zombies waiting to
be repossessed, with 5 metro reporting areas in the national Top 10. Not only
was Miami-Fort Lauderdale 2nd, but Tampa-St. Petersburg was 3rd, Orlando-Kissimmee
was 6th, followed by Jacksonville 7th and Palm Bay, Melbourne and Titusville
10th.
In spite of the impressive sounding numbers, however,
we do not expect to see a tidal wave of foreclosure properties hitting the
market. Florida is a judicial foreclosure state, which means the banks must go
through the courts. Frankly, the lenders and the courts are simply too backed
up to process these foreclosures quickly.
With this many distressed properties out there we will
obviously see a steady stream of REOs coming onto the market into the
foreseeable future, but every month as new reports are issued foreclosure
filings have decreased double digits over the previous annum. Following the
housing crash Lenders tightened their standards (you THINK?), so there are no
more toxic mortgages and we are now seeing the light at the end of the tunnel.
In addition, with home values rising steadily, fewer
and fewer home owners are underwater.
Unfortunately, nobody is tracking statistics of how
much money people have failed to make listening to all those fairy tales about
the fabled “shadow inventory.”
When our market stabilized in 2010 I advised my
clients to start buying. Some listened, made nice profits. Others started
telling me about stories on the Internet about the Shadow Inventory – the
number of homes in some stage of foreclosure. This was basically anybody who
was one payment late on their mortgage. So called experts claimed it was a
looming tidal wave of REO properties which would swamp the market, send prices
plummeting once again. I tried explaining about Florida being a judicial state,
that the courts could never process foreclosures fast enough for that to
happen, but unsophisticated “investors” did not listen.
As a result they missed a market move of 20-something
percent.
Going forward we still have considerable upside in
Fort Lauderdale Real Estate. Though we have come up significantly from out
bottom, we remain well below our market highs.
For a comprehensive in-depth analysis of the prospects
for appreciation in South Florida housing you should check out the “InvestorCentral” page of my website at Fort Lauderdale Beach Property (dot com).
