MI tops the latest list of places with the most vacant homes in the third quarter of 2016. So just how many do we have? Why are zombie foreclosure numbers rising? What does it mean?
America’s 1.4 Million Empty Homes
A new Q3 Residential Vacancy and Zombie Foreclosure Report from ATTOM Data Solutions reveals the current landscape of American real estate. With around 1.4 million vacant properties the U.S. has almost triple the number of empty homes as homeless people on a given night in 2016.
The latest count reflects a 67% year over year increase in vacant bank owned homes as well. Around 18,304 are considered ‘zombie foreclosures’.
While Florida may technically have more vacant REOs than Michigan by a narrow margin, Detroit alone has more vacant properties than almost all of the other top 9 combined.
Michigan’s Vacant Homes
Detroit currently has over 64,000 vacant homes. Flint has the third most at 10,865, and the highest vacancy rate at 7.1% of all local properties. Flint was only trumped on the list by Birmingham, AL which has 11,155.
RealtyTrac reports that 76% of all vacant homes, or 1.1 million houses are considered residential investment properties. Breaking the numbers down to a zip code level 6 of the top 10 cities for vacant homes are either in Flint or Detroit, MI. This is despite all of the thousands of zombie properties which were controversially bulldozed.
Quirks in the Market
There are a number of quirks in the current real estate market. First and most obvious may be the fact that many are complaining about a lack of inventory, which is pumping up prices. Popular media commentator points out the obvious that much of this bank owned property is latent inventory. While it may have been wise to pace the release of foreclosure to avoid completely destroying the market, and for longer, this strategy is now possibly artificially elevating prices in some markets.
In many areas including Detroit we are also seeing a stark contrast with brand new construction going up at new record prices, while nearby existing homes sit vacant and unsold for years at time. The Q2 2016 Home Flipping Report also revealed that while house flipping profits are hitting new highs, flippers were only obtaining an average discount of 26% on acquisitions, and then were reselling them at 9% over value.
It has been common knowledge that Michigan has been one of the most popular property markets in the world for investing over the last few years. Yet, there is clearly much more opportunity. Access to affordable housing is one of the biggest threats we face as a country today, and perhaps globally.
In Q3 2016 the numbers show that at least 5 of America’s major metros have a less than 0.5% vacancy rate. Try finding a place to rent there! This could ultimately prove to provide a big boost to MI, and MI real estate.