Zombie foreclosures—homes abandoned by owners before the foreclosure process concludes—have decreased by 20% over the past year, according to real estate analytics firm ATTOM.

As of the fourth quarter, 215,601 residential properties across the U.S. are in foreclosure, marking a 32.8% decline from the same period last year, according to ATTOM’s October 31 report. Of these, 7,100 are zombie foreclosures, down by 20.2% from last year. “The latest count of zombie homes continues a long-standing trend, with these properties making up only a tiny fraction of the total housing stock,” the report states.

Today, only one in every 14,591 homes in the U.S. is classified as a zombie property, one of the lowest levels in five years. However, these vacant homes can impact neighborhoods by lowering nearby property values, as their unkempt appearance may deter potential buyers and attract vandalism, leading to further declines in local property values.

States seeing the most significant reductions in zombie foreclosures include Connecticut, which saw an 87% drop, followed by Iowa, North Carolina, New Mexico, and Oklahoma, each with a decrease of over 70%.

ATTOM’s CEO, Rob Barber, explained that zombie properties, once common during the Great Recession, are now nearly absent in most communities due to high home-equity levels, fewer foreclosures, and low housing supply. As a result, abandoned properties are quickly picked up by buyers, limiting their impact on local housing markets.

While zombie foreclosures are declining, U.S. homeownership remains steady at 65.6%, within the 65.4–66% range since late 2020, per a November 1 report by Realtor.com. Although housing inventory has returned to early 2020 levels, first-time homebuyers still face affordability challenges due to high listing prices and rising mortgage rates, now over 6.7%. Active listings remain below pre-pandemic levels, with around 950,000 homes available in October 2024, compared to 1.23 million in mid-2019.

The ATTOM report also revealed 1.355 million vacant residential properties nationwide in the fourth quarter, equivalent to one in every 77 homes, a slight increase from last year. A LendingTree study estimated that over 5.6 million homes were vacant across the 50 largest U.S. metro areas last year, with nearly half waiting to be rented or only used seasonally. New Orleans, Miami, and Tampa reported the highest vacancy rates.

In response, some areas are imposing measures to address vacancies. Starting in April 2025, San Francisco will introduce a tax on residential units kept vacant for more than 182 days per year, with fees ranging from $2,500 to $5,000 per unit initially, potentially rising to $20,000 in later years.

Zombie Foreclosures and the Tampa Bay Real Estate Market After Hurricanes Helene and Milton

Although the national numbers are largely positive, Tampa Bay is facing its own set of unique challenges. Foreclosures in the area could rise significantly in the aftermath of Hurricanes Helene and Milton, largely due to the financial challenges property owners are now facing. Here are some key factors contributing to this risk:

The FEMA 50% Rule

Under the FEMA 50% Rule, homeowners with “substantially damaged” properties (those needing repairs costing 50% or more of the home’s pre-storm market value) must bring the entire property up to current building codes and floodplain regulations. For many property owners, especially those whose homes were grandfathered into previous codes, this means taking on prohibitive upgrade costs—often requiring new elevation, extensive structural work, and other costly improvements. For homes with older foundations or low elevations, the expense of compliance can make repairs impossible, pushing some owners into foreclosure as they lack the funds or financing options to proceed.

Gutted Homes Sold “As-Is”

Many storm-damaged properties are being sold “as-is,” meaning they are sold in their current condition without repairs. These homes are often gutted down to the studs, needing extensive work just to become habitable. With the damage and the requirement to rebuild to new standards, the expense of these renovations can be overwhelming, especially when financing for these types of repairs can be difficult to secure. Consequently, many of these properties may stay on the market longer or face price reductions, which could lower neighborhood values and create additional financial strain for other local homeowners.

High Interest Rates Reducing Buyer Interest

Rising interest rates have led to higher mortgage costs, making it harder for buyers to afford new home loans, especially in a market where repair and renovation costs are added burdens. Even motivated buyers may be discouraged by the high cost of borrowing combined with the investment needed to restore damaged properties. As the pool of buyers shrinks, homeowners who might otherwise sell to avoid foreclosure have fewer options, raising the risk that they could default on their loans.

Increased Susceptibility to Future Storms

Properties in Tampa Bay and other areas vulnerable to hurricanes and flooding are now facing increased insurance premiums or, in some cases, policy cancellations altogether. The region’s susceptibility to storms could further drive away prospective buyers concerned about future risks. Additionally, as more homes are left unrepaired or unsold, neighborhoods might start to appear neglected, reducing appeal and potentially further affecting property values.

Altogether, these factors create a challenging scenario for Tampa Bay homeowners impacted by Hurricanes Helene and Milton. For many, the inability to finance repairs, coupled with an unsupportive market, may lead them to default on their loans, thus increasing foreclosure rates throughout the area.