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The proportion of pre-foreclosure homes abandoned by their owners, known as zombie properties, has seen a noticeable increase, with the hardest-hit areas concentrated in the South and Midwest. According to a Q2 2025 report from ATTOM, 3.3% of pre-foreclosure properties were vacant, up from 2.9% during the same period last year. This trend highlights specific regional economic pressures but remains a small segment of the overall housing market.
A zombie foreclosure occurs when a homeowner vacates a property after receiving a foreclosure notice but before the bank officially repossesses it. These homes often sit vacant and can fall into disrepair, potentially lowering property values in the neighborhood. The term "pre-foreclosure" refers to the initial legal stage where a lender has filed a default notice but has not yet taken full ownership through auction.
The largest percentage increases in zombie properties year-over-year were in states with at least 50 such homes. Based on ATTOM's data, the top five states are:
Economist Jiayi Xu notes that many affected counties are in rural areas with lower property values. Homeowners may have less incentive to negotiate new payment plans for low-equity properties, while lenders might abandon the foreclosure process if the costs of maintaining and reselling the home exceed its market value.
Beyond state-level data, the issue is hyper-localized. The metropolitan areas with the highest proportion of zombie pre-foreclosures are clustered in the Midwest:
At the ZIP code level, the highest rates were found in 61605 (Peoria, IL) at 51.9%, and 44108 (Cleveland, OH) at 42.2%. Factors contributing to these concentrations can include high property taxes, as seen in Illinois, or rising costs like homeowners association fees and property insurance in states like Florida, which also appeared on the list.
Despite the increase, zombie foreclosures remain a relatively rare occurrence. The overall number of these properties is low, and they are not sitting vacant for extended periods. ATTOM CEO Rob Barber stated, "Thankfully, we're not seeing a lot of homes sitting vacant due to pending foreclosures... buyers seem to be scooping up these repossessed homes relatively quickly." This situation is not comparable to the widespread vacancy seen during the 2008 housing crisis.
A zombie foreclosure can represent an opportunity to purchase a home below market value, but it requires careful consideration. These properties are typically sold as-is, meaning the seller makes no guarantees about the condition and often does not allow inspections. Listings may show very low prices, but these are usually starting bids for an auction.
Prospective buyers should always conduct thorough due diligence. This includes working with a real estate agent experienced in foreclosure transactions and budgeting for significant repairs, as these homes may have issues like structural damage, pests, or unauthorized occupants. Make sure to run the costs to see if the investment makes financial sense for your situation.
