Just as the housing market is gaining momentum, certain distressed properties -- called "vampires" and "zombies" -- are threatening to suck a little life out of the recovery. When these properties inevitably hit the market, they could drive a stake through the heart of home price appreciation -- well, at least temporarily.
A report by RealtyTrac found that nationwide, approximately 47 percent of bank-owned homes are vampire properties, meaning they are still occupied by the previous owner. In some metro areas, the percentage is much higher -- 61 percent in "the City of Angels," or Los Angeles; 65 percent in Houston; 64 percent in Miami; and 57 percent in Cincinnati.
In addition, zombies, or foreclosed properties that have been abandoned by the homeowner, account for 20 percent of foreclosures nationwide. The longer these unoccupied homes remain unsold, the higher the likelihood they will fall further into a state of disrepair.
What happens when the monsters return?
"The zombie and vampire foreclosure numbers indicate that there is a substantial, inevitable inventory of homes in foreclosure or already foreclosed that are being held back from the market," says Daren Blomquist, vice president at RealtyTrac. While keeping that inventory off the market may have boosted home prices in the short term, he adds that once they go up for sale, the recovery could lose steam.
In other words, zombies and vampires could cannibalize sales of other homes.
But rising home prices might be the driver that motivates banks to put vampire properties up for sale and complete the foreclosure process on zombies, according to Blomquist. He expects vampire properties to come on the market within 12 months, while zombie properties will take a little longer -- 18 months to two years.
While these distressed properties account for a small percentage of total homes for sale nationwide, they could make an impact on the recovery in certain areas where there are a lot of them. In Virginia, for example, 72 percent of bank-owned properties are vampires.
Keep up with your wealth and mortgages. and follow me on Twitter @JudyMartel.
Get real-time rate quotes with Bankrate's Mortgage app.