Just in Time for Halloween: Vampire Properties

Libby Kane
Posted

vampire mortgagesWhile all eyes are on the government shutdown and the rocky implementation of the Affordable Care Act, another threat lurks in the darkness: vampire properties.

Spooked yet?

As with most things real estate, it isn’t as scary as it sounds: “Vampire properties” simply refer to foreclosed homes, now owned by the bank, that are illegally occupied by their prior owners. It’s pretty common—MarketWatch reports that previous owners are living in 47% of the country’s foreclosed, bank-owned properties.

One real estate expert tells MarketWatch that vampire properties are “sucking the life out of the housing market.” Foreclosed homes can’t be sold if they’re occupied, meaning the bank is holding on to a lot of available housing inventory that should gradually come on the market, but doesn’t. In states like Virginia and Nebraska,  vampire properties make up 72% and 68% of bank-owned homes, respectively. This reserve has the potential to subdue the housing market by flooding it with inventory—and therefore potentially decreasing market prices.

If you’re in the market for a new home, make sure you’re educated about foreclosures and short sales, and that you steer clear of the top mortgage-shopping and home-buying mistakes.