Home buyers and their agents have had a really hard time winning bids on houses over the last year and a half. It’s been a feeding frenzy and I’ve often wondered where all the houses went. Did a whole crop of new people show up on the planet? How could the ratio of houses to homebuyers be so low? For a while, there were talks of a ‘shadow market.’* However, as time went on, and the multiple showings and multiple offers continued, belief in the elusive shadow market was lost. Many boldly stated a shadow market didn’t exist. Well, if you’ve been wondering where all the houses went, I think they may have been found. An article by Evan Nemeroff discusses Vampire REOs and Zombie Foreclosures.** (I love the names. How fitting, since Halloween is coming up soon.)
Vampire REOs*** are homes that have been foreclosed but are still occupied by the previous homeowner. It’s estimated that 47% of bank-owned homes fall into this category.
Did banks withhold properties from the market to create competition, and that competition raised home prices, which then bolstered the housing market? It appears that way, especially in the Denver area.
Zombie Foreclosures are homes that are “still deteriorating through the foreclosure process but have been vacated by the homeowner.” These properties are not maintained and can potentially harm the values of their surrounding neighborhoods. In the article by Evan Nemeroff, RealtyTrac says 20% of its database is made up of Zombie Foreclosures.
So, what would happen if the shadow market were suddenly released? Would home values drop? Would the housing market recovery be harmed? It certainly might. However, what if it were released slowly? Would it create great opportunities for hungry buyers who are more than ready to get into a home?
Either way, these two markets of Vampire REOs and Zombie Foreclosures “can be bargain opportunities for proactive buyers and investors.” Refer to the article to discover which cities hold the highest numbers of these properties.
Let me help you through the maze – to find the best bargain that meets your needs.
*The shadow market, or shadowmarket, is the inventory of investor owned single-family homes, townhouses, and condos that attract renters away from traditional apartment complexes. (Wikipedia)
** Nemeroff, Evan “Vampire REOs and Zombie Foreclosures Threatening Housing Recovery,” National Mortgage News, Oct. 3, 2013
***Real estate owned or REO is a class of property owned by a lender—typically a bank, government agency, or government loan insurer—after an unsuccessful sale at a foreclosure auction. (Wikipedia)
