Zombie Foreclosures Dip Across U.S. but Investor-Owned Vacancies Are Highest in the Midwest

by Kiri Blakeley

Foreclosed "zombie" properties have fallen slightly across the nation but vacancies are high in four Midwestern and one Southern state.

The number of zombie properties for the fourth quarter of 2025 rose quarter over quarter in 21 states and the District of Columbia, but by small margins and as few as a single additional zombie property in some states, the latest report from real estate analytics firm ATTOM found.

The report showed that 228,943 residential properties nationwide were in the process of foreclosure during the fourth quarter. Of those, 3.25%, or about 7,448 homes, were "zombie" properties, defined as having been abandoned by their owner before the conclusion of foreclosure proceedings.

That was down from a 3.38% zombie rate the previous quarter.

"These continuously low vacancy rates that the nation has held steady at around 1.4% for nearly four years, show that record high prices haven’t dampened the demand for homes," said Rob Barber, CEO of ATTOM.

"It’s a good sign for local housing markets that even as we’ve seen foreclosure filings increase, the rate of homes in foreclosure that are abandoned is going down."

Homes owned by institutional investors were slightly more likely than typical homes to be vacant in the fourth quarter.

Of the 880,347 investor-owned properties nationwide, 3.5% were unoccupied compared with the overall national rate of 3.3%.

Typically, investors, especially larger investors with many properties, don't live on-site, which would explain why it is vacant or abandoned before and during the foreclosure process.

ATTOM did not distinguish between large and small investors. Smaller investors typically have 12 properties or less. The firm also defined "investor-owned" as not owner occupied.

ATTOM looked at metropolitan statistical areas with at least 100,000 residential properties, counties with at least 50,000 residential properties, and ZIP codes with at least 1,000 residential properties.

States with the highest vacancy rates

The states with the highest vacancy rates for investor-owned homes were Indiana (7.1%); Illinois (6.1%); Alabama (5.9%); Oklahoma (5.9%); and Kansas (5.8%).

Except for Kansas, these are the same states that were most vacant in the third quarter. Ohio has dropped out of the top five.

Investors look for properties that are cheap to buy but still can be rented out at decent rates. The Midwest offered that. But all it takes is a downturn in rentals or unexpected expenses to mean the investor—who likely doesn't live nearby—might abandon the property rather than continue to deal with it during a foreclosure.

Properties that sit empty can lead to foreclosure. The Midwest also led with the highest rates of pre-foreclosure owner-occupied homes that had been abandoned, or become "zombies."

The top five metros were Cedar Rapids, IA (14.3% of pre-foreclosure homes abandoned); Peoria, IL (11.9%); Wichita, KS (11.8%); Cleveland (10.8%); and Youngstown, OH (10.5%).

As for the states with the lowest number of vacancy rates for investor-owned properties?

They tended to be spread out across the nation, with the lowest being in New Hampshire (0.8%); Vermont (1%); Idaho (1.3%); Utah (1.5%); and North Dakota (1.5%).

Foreclosures can be a great investment, and a way to snap up a property at below-market rates, sometimes significantly so. But do your due diligence, and work with an agent who understands the process.

"Zombie" properties that have been abandoned for a while can come with their own set of problems, such as damage, infestations, or even squatters with legal rights.

Indiana

Total number of vacant investment properties: 30,097

Vacancy rate: 7.1%

Median home list price: $299,450

This two-bedroom foreclosed home in Logansport, IN, is listed for only $98,000. (Realtor.com)

Illinois

Total number of vacant investment properties: 36,102

Vacancy rate: 6.1%

Median home list price: $316,500

"Contractors, investors, and rehabbers, this is your chance ..." reads the listing for this Belleville, IL, five-bedroom with bids starting at a mere $5,000. (Realtor.com)

Alabama

Total number of vacant investment properties: 25,167

Vacancy rate: 5.9%

Median home list price: $329,950

This five-bedroom foreclosed home in Montgomery, AL, is $99,900. (Realtor.com)

Oklahoma

Total number of vacant investment properties: 24,502

Vacancy rate: 5.9%

Median home list price: $299,250

This five-bedroom foreclosed home in Oklahoma City will need some major TLC but at $124,950 it might be worth it. (Realtor.com)

Kansas

Total number of vacant investment properties: 17,994

Vacancy rate: 5.8%

Median home list price: $295,000

This 20-year-old, three-bedroom foreclosed home in Bonner Springs, KS, is listed for $350,000. (Realtor.com)

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