So-called “zombie” foreclosures have been known to lower property values of surrounding homes. But they also present another problem: property tax revenue lost, RealtyTrac recently reported.
According to RealtyTrac’s most recent data on zombie foreclosures, about 21 percent of the 141,406 total foreclosures reported in Q2 were of the zombie variety. With the owner having deserted the distressed property, not only is there no one to maintain the property’s outward appearance, but there is no one paying taxes on the property.
RealtyTrac estimates near $400 million in delinquent property tax revenue as a result of zombie foreclosures in Q2. The top metropolitan statistical area (MSA) as far as delinquent property tax revenue in Q2, according to RealtyTrac, was New York-Northern New Jersey-Long Island, with $208.5 million. This MSA also reported the highest total number of zombie foreclosures of any MSA in the nation in Q2 with 13,574, according to RealtyTrac.
The MSA with the second highest delinquent tax revenue total was Chicago-Naperville-Joliet with $45.1 million. This area placed third in total zombie foreclosures with 9,975 behind New York and Miami-Fort Lauderdale-Pompano Beach (12,958). Miami placed third in delinquent property tax revenue due to zombie foreclosures, with $36.3 million.
Much has been made in the last few months about the problems caused by zombie foreclosures, which are properties that have been deserted by their owners but the title is still in the owner’s name because the foreclosure process has not been completed. The fact that these homes fall into disrepair with no one to maintain them, as well as the fact that they attract vandals and other crime, has been well documented. Zombie foreclosures declined in 38 states according to RealtyTrac’s Q2 report, but they were still up in several states. With more than 48,000 zombie foreclosures in Q2, Florida accounted for nearly a third of the nation’s total.
Zombie Foreclosures Result in Millions of Delinquent Tax Revenue Dollars