'vampire' foreclosures take a bite out of the us housing market

Photo: Bankforeclosuresale

Nationwide, 47 percent of bank-owned homes are still occupied by their previous owners, but Why would they 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.