Zombie Foreclosures Decline Nationwide Amidst Peak Housing Demand

The number of “zombie foreclosures” – homes abandoned by owners in the midst of foreclosure proceedings – has edged down, and with the U.S. residential vacancy rate hovering near a four-year low, it paints a picture of a real estate market that’s largely moving in the right direction. This welcome decline in vacant, distressed properties suggests improved housing demand and potentially fewer homeowners falling through the cracks.

Zombie Foreclosures Decline Nationwide Amidst Peak Housing Demand

As ATTOM’s latest Q4 2025 Vacant Property and Zombie Foreclosure Report reveals, the national zombie foreclosure rate has dropped to 3.25 percent, down from 3.38 percent in the previous quarter. This translates to roughly 7,448 homes currently sitting in this unsettling state. Simultaneously, the overall U.S. residential vacancy rate has dipped slightly to 1.3 percent, impacting about 1.4 million homes. This sustained low vacancy rate, holding steady around 1.4 percent for nearly four years, is a significant indicator that the high prices we’ve seen haven’t extinguished people’s drive to find a home. From my perspective, this is a genuinely positive sign for the stability and health of our housing markets.

What Exactly Are Zombie Foreclosures, and Why Do They Matter?

Before I dive deeper into the numbers, it’s crucial to understand what a “zombie foreclosure” truly is. Imagine a homeowner struggling to keep up with their mortgage payments. They enter the foreclosure process, but before the bank can officially take ownership, life throws them a curveball, and they have to move out. They abandon the property, leaving it in a sort of limbo. It’s still legally in foreclosure, but no one is living in it, no one is maintaining it, and it can fall into disrepair, becoming an eyesore and a potential magnet for crime in the neighborhood. These are our zombie properties.

Why is their decline important? It signifies that fewer people are abandoning their homes before the foreclosure process is finalized. This can be attributed to several factors, which I’ll explore. Primarily, it suggests that either homeowners are finding ways to navigate their financial difficulties, or the demand for housing is so strong that even distressed properties are being snapped up faster.

The National Picture: A Slow but Steady Improvement

ATTOM’s comprehensive report, which meticulously analyzes publicly available real estate data including foreclosure status, equity, and owner-occupancy, alongside monthly vacancy updates, provides a clear snapshot of the current market. The slight dip in both vacancy and zombie foreclosure rates, while seemingly small, contributes to a larger narrative of housing market resilience.

Rob Barber, CEO of ATTOM, aptly points out, “These continuously low vacancy rates that the nation has held steady at around 1.4 percent for nearly four years, show that record high prices haven’t dampened the demand for homes.” I couldn’t agree more. When demand is high, it often means properties are selling quicker. This can include properties that might otherwise have lingered in pre-foreclosure status for extended periods. A faster sales cycle, even for troubled properties, reduces the likelihood of them becoming truly abandoned “zombies.”

State-by-State Variations: Where the Trends Differ

While the national trend is encouraging, it’s never a uniform story across the country. My experience working with diverse real estate markets has taught me that local conditions always play a significant role.

States Seeing More “Zombie” Activity:

ATTOM’s data highlights that the number of zombie properties did increase quarter-over-quarter in 21 states and the District of Columbia. However, these increases were often by very small numbers. Among states with a notable number of zombie properties, Oregon saw a significant jump of 37.8 percent, reaching 51 zombie properties. Nevada followed with a 31.1 percent increase, totaling 59 zombie properties. Georgia, Ohio, and Arizona also reported modest rises.

It’s essential to look at these numbers in context. A percentage increase can sound alarming, but if the starting number is very small, a few additional properties can skew the percentage. For instance, if a state only had 10 zombie properties and it rose to 15, that’s a 50% increase, but it’s a manageable number overall.

States Slashing Their Zombie Loads:

On the flip side, several states have made notable progress in reducing their zombie foreclosure numbers. Oklahoma led the pack with a 23 percent drop, now having 57 zombie properties. Indiana saw a 12.7 percent decrease, with 219 zombie properties remaining. California, Michigan, and Iowa also reported significant declines. This suggests proactive measures or underlying market strengths in these particular areas.

Vacancy Hotspots and Snow Globes: Where Homes Sit Empty

When we look at overall vacancy rates, another interesting picture emerges.

States with Higher Vacancy Rates:

The states with the highest percentages of vacant homes in the fourth quarter were generally concentrated in the heartland and some southern regions:

• Oklahoma: 2.4 percent
• Kansas: 2.3 percent
• Alabama: 2.2 percent
• Missouri: 2.1 percent
• West Virginia: 2.1 percent

These states might face unique economic challenges or have a higher inventory of older homes that take longer to sell.

States with Very Low Vacancy Rates:

In stark contrast, the New England states consistently show remarkably low vacancy rates, acting like little real estate snow globes where every home seems to be occupied:

• New Hampshire: 0.3 percent
• Vermont: 0.4 percent
• New Jersey: 0.5 percent
• Idaho: 0.5 percent
• Connecticut: 0.5 percent

These low figures underscore intense demand and very tight housing supply in these desirable areas.

Metropolitan Areas: Pockets of Concern and Areas of Strength

The report also zooms in on metropolitan statistical areas (MSAs) with at least 100,000 properties. Here, we see that the majority of these larger metro areas have zombie property rates below the national average of 3.25 percent. This is reassuring, as it means widespread blight isn’t the norm.

Midwestern Cities Leading in Zombie Rates:

However, certain Midwestern cities stand out with higher concentrations of abandoned pre-foreclosure homes:

• Cedar Rapids, IA: 14 percent of pre-foreclosure homes abandoned
• Peoria, IL: 11.9 percent
• Wichita, KS: 11.8 percent
• Cleveland, OH: 10.8 percent
• Youngstown, OH: 10.6 percent

These areas might be experiencing specific economic downturns or have older housing stock that is harder to revitalize.

Metro Areas with Zero Zombies:

On the other end of the spectrum, it’s incredibly encouraging to note that some of the largest metro areas reported no zombie properties at all in the fourth quarter. These include Grand Rapids, MI, Nashville, TN, and Raleigh, NC. This indicates very robust housing markets in these regions, where properties move quickly and distress is minimized.

Investor-Owned Properties: A Slight Difference in Vacancy

ATTOM also looked at properties owned by institutional investors. My professional opinion here is that it’s critical to differentiate between various types of investors. Flippers might leave a property vacant for renovation, while buy-and-hold investors often aim for long-term occupancy.

The data shows that investor-owned homes were slightly more likely to be vacant than typical homes nationwide. Of the 880,347 investor-owned properties, 3.5 percent were unoccupied, compared to the overall national rate of 3.3 percent. This isn’t a massive difference, but it does suggest that some investment strategies might involve properties sitting empty for periods, whether for renovation, sale, or waiting for the right tenant.

The states with the highest vacancy rates for investor-owned homes were generally those already showing higher overall vacancy rates, like Indiana, Illinois, Alabama, Oklahoma, and Kansas.

The Takeaway: Demand Pulling the Market Forward

Looking at the full scope of ATTOM’s Q4 2025 report, the overarching message is one of a housing market characterized by strong demand. The consistent vacancy rate hovering near a four-year low, combined with the shrinking number of zombie foreclosures, points to a market that is absorbing properties relatively well.

For homeowners, this generally means a more stable market. For potential buyers, it means intense competition. For those in foreclosure, it implies that while difficult, the situation might not inevitably lead to an abandoned property thanks to the robust demand and potentially more streamlined processes for selling or taking over distressed assets.

While localized issues and specific metro areas still require attention, the national data provides a reassuring glimpse into a housing economy that, despite its challenges, is demonstrating resilience and a capacity to move forward. It’s a complex picture, but one that leans towards positive progress.