By Deborah Goonan, Independent American Communities
Overall, the number of abandoned homes in foreclosure is declining. However, there are still real estate markets that have been slow to recover, and where “zombie” foreclosures remain a big problem. It varies by real estate market.
Vacant “Zombie” Foreclosures Decrease 30 Percent in Second Quarter 2016 Compared to a Year Ago May 17, 2016
A few facts from the article:
Markets with the most zombie foreclosures
States with the most vacant “zombie” foreclosures were New Jersey (4,003), New York (3,352), Florida (2,467), Illinois (1,074), and Ohio (1,064).
Investment properties account for 75 percent of all vacant homes
A total of 1.1 million (1,055,725) U.S. residential investment properties were vacant as of May 2016, 75 percent of the all vacant properties nationwide and representing 4.4 percent of all investment properties.
Most of the time, when we think of abandoned properties we think of single family houses with overgrown landscapes and clogged rain gutters. But, as the following article illustrates, there’s another kind of “zombie” foreclosure – the condominium.
Yep, banks are dragging their feet foreclosing on condos, too, and they aren’t paying assessments either. And when condos are abandoned, it creates even more havoc for the remaining owners and residents.
For one thing, common charges (assessments) per unit tend to be much higher for condo association members than they would be for single family homes with a homeowners association. So when each remaining member has to pick up the slack, it adds up to assessment increases quite quickly.
Another problem is that abandoned units that are not maintained are prone to infestation by insects, rodents, or mold. Because walls and floors are connected, this can cause the scourge to migrate over to neighboring condo units. The same thing can happen in townhouse associations, to a lesser extent.
Here’s a report of the problem in certain portions of New York state.
Neighbors: ‘Zombie’ condominiums also a drain
The meticulously maintained streets and gardens in the Heritage Hills condominium development in Somers do not show any signs of distress. But at least one of the 30 condominium associations in the 2,600-unit complex has been affected by “zombie” units.
Two units in the 84-unit Condo 7 cluster have remained abandoned for about three years, after their owners died, said Leslie Fulton, secretary of the cluster’s association. Both units were “under water,” meaning that property values were less than what the owners owed. Families of the deceased have walked away, Fulton said.
Between the three years’ of common charges and payments for the ongoing $1.5 million roof renovation project in the cluster, the remaining homeowners have paid about $70,000 extra to fill the gap, Fulton said. And they haven’t seen the light at the end of the tunnel because the foreclosure process on the units hasn’t started.
“The unit owners feel resentful of their obligation to pay to have these units maintained at their expense,” Fulton said, adding that she has been calling the banks and government agencies to get their attention. “The roofing project was supposed to be a five-year project, but we’re not going to finish paying for it in five years.”
Read more here:
Of course, the “Zombie” foreclosure problem has been around for years in many other states such as Florida, Illinois, South Carolina, Texas, Georgia – really any other state that found itself with an oversupply of condominiums when the real estate market tanked.
Now that the market is red hot in some areas, the issue of abandoned property in foreclosure is getting less attention. But it’s only a matter of time before the cycle repeats itself in markets where developers and investors have been speculating on new high-end luxury housing, “affordable” townhouses, and rental apartment towers.
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