Homeowners Vacate Many Properties Pre-Foreclosure

Even as real estate agents in many parts of the country are decrying the lack of available homes to sell, RealtyTrac, the California company that tracks foreclosure activity, reports that nearly three-quarters of a million properties are standing vacant across the country. Twenty percent of all properties for which foreclosures are pending or 167,680 homes are empty because their owners have moved out even before the foreclosure has taken place. Another 544,274 properties are in bank-owned inventories (REO) and are presumably also vacant.

"Somewhat ironically, efforts to slow the slide of the housing market in previous years are hampering a smooth recovery by holding back inventory of homes that almost certainly must sell in the future but are not yet listed for sale," said Daren Blomquist, vice president at RealtyTrac. "This includes homes in foreclosure that have been vacated by the homeowner, which account for one in every five U.S. properties actively in the foreclosure process, as well as more than half a million bank-owned homes.

Florida has nearly one-third of the vacant, non-foreclosed homes, a total of 55,503 properties. Illinois is second with 17,672 followed followed by California (9,802), Ohio (9,723), and New York (9,173). States that were above the national average of 20 percent in owner vacated properties included Indiana, Oregon, Nevada, Washington, and Georgia.

Bloomquist said that efforts by state and federal governments to prevent foreclosures and keep properties from flooding the market and further hurting home values have had an unintended consequence. The foreclosure process now takes an average of 477 days nationwide and up to two years in some states. This is holding many of what Bloomquist called "must-sell properties" off the market. "Even if all these homes flooded the market simultaneously they would likely not cause the once-feared double dip in prices given supply constraints from non-distressed sellers and stronger demand," he said. "Given these market dynamics, it's not surprising to see that Florida, Illinois and New Jersey - states with three of the four longest foreclosure timelines - have all had laws take effect in the last six months that speed up the foreclosure process on vacant properties. These laws should help provide some extra supply and possibly help reduce the threat of another housing price bubble forming in these markets."

Chicago had the most owner-vacated foreclosures of any metro area nationwide, with 14,717, representing 17 percent of all properties in foreclosure, followed by Miami (13,901), New York (10,074), Tampa-St. Petersburg-Clearwater (9,998), and Orlando (5,569).

Lower end properties were more likely to be vacant. Twenty-nine percent of homes with values below $50,000 and 25 percent valued between $50,000 and $100,000 were vacant but only 12 percent of those valued above $1 million