🧟‍♂️ Zombie Foreclosures Are Rising: What's Driving It, and Where It's Hitting Hardest

🧟‍♂️ Zombie Foreclosures Are Rising: What's Driving It, and Where It's Hitting Hardest
Published May 29, 2025
Sources: ATTOM, Realtor.com, KW Default Solutions

The number of zombie foreclosures—residential properties abandoned by their owners before foreclosure is completed—is once again on the rise. According to new data from real estate analytics firm ATTOM, 7,329 pre-foreclosure homes in Q2 2025 are now classified as “zombies,” representing 3.3% of all homes in foreclosure.

This marks a modest increase from 2.9% during the same period last year, suggesting a trend that default professionals, investors, and local governments alike should not ignore.

 
📍 Where Are Zombie Foreclosures Concentrated?
Zombie properties are most commonly found in the South and Midwest, particularly in pandemic-era boom states and rural counties. Here’s a look at the states with the biggest year-over-year increases among areas with at least 50 zombie homes:

North Carolina: ▲ 52.5% (from 59 to 90)
Iowa: ▲ 52.1% (from 71 to 108)
Texas: ▲ 51.9% (from 162 to 246)
South Carolina: ▲ 43.8% (from 64 to 92)
Kansas: ▲ 29% (from 69 to 89)
These areas often feature low property values, which can influence both borrower behavior and lender decision-making. In such cases, homeowners may walk away from homes with little equity, while lenders may abandon foreclosures if the resale value doesn’t justify the cost of repossession and maintenance.

“In low-value areas, the cost of foreclosing, maintaining, and reselling a home may exceed its market value,” explains Jiayi Xu, economist at Realtor.com®. “Lenders may abandon the process midstream, leaving homes to deteriorate.”
 
🔍 Highest Vacancy & Zombie Rates by Region
Vacancy rates are highest in parts of the South:

Oklahoma: 2.4%
Kansas: 2.3%
Alabama & Missouri: 2.2%
West Virginia: 2.1%
And when it comes to zombie hotspots, the Midwest dominates:

Wichita, KS: 12.1% of pre-foreclosures are zombies
Peoria, IL: 11.8%
Toledo, OH: 10.2%
Cedar Rapids, IA: 10.2%
Cleveland, OH: 10%
At the ZIP code level, Peoria’s 61605 leads the nation with 51.9% of its pre-foreclosures categorized as zombie properties. Other hard-hit areas include Cleveland’s 44108, Deltona’s 32118, and Tampa’s 33708.

 
⚠️ Why Zombie Foreclosures Matter
Zombie homes aren't just empty—they represent physical and financial decay that can drag down neighborhood property values, invite crime, and reduce local tax revenue.

However, it’s not all doom and gloom. According to ATTOM CEO Rob Barber, many of these properties are not sitting vacant for long:

“Buyers seem to be scooping up these repossessed homes relatively quickly, so they aren’t sitting empty. Nobody wants to see a return to the days of the 2008 housing crisis.”
 
🏚️ Opportunity or Trap? Buyer Beware.
While zombie foreclosures may present deep discount opportunities, they’re also often sold as-is, without inspections, disclosures, or even access before purchase—particularly in auction settings.

Many listings are misleadingly priced low to start bidding (e.g., $1).
Long-vacant homes may come with structural damage, pests, or squatters.
Always work with professionals who understand foreclosure sales.
“Foreclosed properties usually need work to bring them back to life,” says Jeremy Beres of Realty Executives Tri-States. “Make sure to run the numbers before jumping in.”
 
🔚 Bottom Line
The rise in zombie foreclosures is a signal of strain in parts of the housing market—particularly in lower-value, rural, or tax-burdened regions. But it also creates space for strategic investors, housing authorities, and real estate professionals to lean in and lead.

 
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Sources:

ATTOM Q2 2025 Zombie Foreclosure Report
Realtor.com
Interview commentary via Realtor.com