Just in time for Halloween, RealtyTrac has issued a new report on “vampire” foreclosures.
Vampire foreclosures are defined as homes that have gone through the court proceedings and are bank owned, but are still occupied by their previous owners.
Why would the previous owners still live in them? Because they can, said Daren Blomquist, a vice president at the Irvine, Calif.-based RealtyTrac.
“They are accustomed to living there for free without any consequence,” Blomquist said. “And up until recently, the banks have not had a huge motivation to kick them out because home prices were not increasing and the banks had so many properties they were dealing with.”
Nationwide, 47 percent of bank-owned homes are occupied by their previous owners. Blomquist said vampire foreclosures will slow price appreciation as they start to go up for sale and tilt real estate more to a buyer’s market.
“These are still distressed properties and will typically sell at a cheaper price,” he said.
A slowdown in asking prices has already been measured by online real estate analysis firm Trulia. Jed Kolko, chief economist for Trulia, said expanding inventory and a decrease in investor activity is leading sellers to lower their expectations.
“Asking home prices give us the first look at where home sale prices are headed, and they point to a slowdown,” Kolko said.