Every real estate cycle has its ghosts—and right now, a quiet uptick in “zombie” foreclosures is haunting select pockets of the country. These aren’t your run-of-the-mill distressed properties. They’re vacant, abandoned, and stuck in limbo: neither reclaimed by lenders nor occupied by owners. In markets like Wichita, Peoria, and rural North Carolina, they’re starting to pop up with surprising frequency.

What do these zombie homes tell us? More than you might think. For investors, they serve as red flags—and, occasionally, flashing green lights.

The Numbers Behind the Neglect

According to ATTOM’s latest housing vacancy report, over 7,300 U.S. properties in pre-foreclosure are currently sitting empty. That’s roughly 3.3% of all pre-foreclosures—a slight uptick from last year and a clear signal that distress is creeping back into the system, even if national home prices are holding strong.

Where is this happening? The data points squarely at boom-and-bust states:

North Carolina: Zombie properties jumped 52.5% year-over-year

Iowa: +52.1%

Texas: +51.9%

South Carolina: +43.8%

Kansas: +29%

It’s no coincidence that many of these states saw explosive demand during the pandemic. Now, as the heat cools and equity fades, some owners are simply walking away—especially in low-value or rural areas where foreclosure costs outweigh a home’s market value.

The Economic Signal

These aren’t just isolated problem properties—they’re symptoms of deeper market strain. In lower-income neighborhoods, even modest increases in taxes or insurance premiums can trigger delinquencies. Add rising HOA fees (especially in Florida), aging housing stock, and tight credit, and you get the perfect conditions for zombie foreclosures to reemerge.

Metro areas seeing the highest zombie shares include:

Wichita, KS (12.1%)

Peoria, IL (11.8%)

Toledo, OH (10.2%)

Cedar Rapids, IA (10.2%)

Cleveland, OH (10%)

Some ZIP codes are seeing more than a third of all foreclosures classified as zombie. In Peoria, for example, the 61605 ZIP code clocks in at a staggering 51.9%.

The Investor Opportunity—And Risk

To be clear, these homes represent a fraction of the market, and many are scooped up quickly. But for savvy buyers, a zombie property can offer a rare opportunity to acquire real estate below market value. The caveat? These homes are often sold “as-is,” with no inspections and plenty of hidden problems.

Rodents, mold, structural damage—even squatters—are all potential risks. But so is the upside: historic character, large lots, and bargain-basement prices that don’t come around often in today’s market.

Final Thought:

The rise in zombie foreclosures isn’t a panic signal—but it is a reminder. Not all is calm beneath the surface of today’s housing market. For developers and investors, especially those targeting value-add or opportunistic plays in secondary markets, these trends deserve a close watch.

I’ll continue tracking these micro-shifts in distressed assets and vacant property trends as the cycle unfolds. If you want to be ahead of the curve, not behind it, bookmark this blog and subscribe to my newsletter. The smart money isn’t scared of zombies—it’s prepared for them.