The housing market has a growing problem: homes are increasingly being left to be foreclosed upon more and more times before the process has even finished. Such “zombie foreclosures” are becoming widespread as homeowners are finding themselves struggling to manage higher mortgage payments and growing living costs.

While these are quite rare occurrences currently, some states are witnessing them more than others. This leaves one to think about what is going on within these states and how this will affect homeowners and the community. The next question then arises: Why are people walking away from homes, and how can something be done to address this? Let’s take a closer look.

What Is a Zombie Foreclosure?

A zombie foreclosure happens where the owner vacates the property thinking that they are released from the situation but the foreclosure process has not been finalized. The owner will be held responsible for property taxes, insurance, and maintenance but this will often lead to abandoned homes that lower the property values within the neighborhood.

Few homeowners are truly conscious of how the system functions and assume that once they leave the property, there are no further financial obligations to the property. That simply isn’t the case. The number of zombie foreclosures has been escalating, with over 212,000 homes in some stage of foreclosure during early 2025. At least 7,094 of them were unoccupied, according to figures provided by ATTOM.

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Why Are Some States Hit Harder Than Others?

Zombie foreclosures are not taking place everywhere. Some states are experiencing large spikes, but other states are quite steady. There are various explanations that include the local economy, the length of time the foreclosure process lasts, and the fact that homeowners are selling the property before the problem gets worse. The top five states that are experiencing the highest spikes in zombie foreclosures are:

Missouri

Missouri saw an 85 percent rise in zombie foreclosures from 27 to 50 during one year. Even though Kansas City has a relatively low median home price of $249,000, the state is still enduring the effects of economic uncertainty.

Michigan

Michigan ranks next with a 51 percent increase in zombie foreclosures (from 55 to 83). Despite some of the lowest housing prices in the country—at approximately $100,000 on average—many homeowners are struggling to keep up payments.

South Carolina

South Carolina saw a 31 percent rise, with zombie foreclosures growing from 74 to 97. But the market remains robust in the case of cities like Charleston, where the median home price is $645,000.

Indiana

Indiana experienced a 28% rise, from 215 to 276. While the state has an affordable housing market (Indianapolis’ median home price is $255,000), there are some areas that are suffering economically that make homeownership difficult.

Kansas

Kansas rounds out the top five with a 26 percent rise, from 69 to 87 zombie foreclosures. The market within the state is very stable, with the median home selling price being $270,000.

How Does This Relate to the Overall Housing Market?

Whereas zombie foreclosures are growing in certain states, foreclosures are dropping overall throughout the nation. Why are some states then seeing an uptick in zombie foreclosures? It has to do with homeowners’ capability to sell in advance.

In strong housing markets, financially troubled individuals can sell their homes and take away a profit. But where the home appreciation is stagnant or the foreclosure process is sluggish, some homeowners find themselves having no other recourse but to leave behind their homes.

Even big city areas such as Miami, New York, and Chicago are finding it hard to deal with large numbers of foreclosed pre-foreclosure homes. Some contributing causes to these foreclosures include high property taxes, expensive living costs, and changes in the labor market despite robust real estate marketplaces.

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What Can Homeowners Do to Avoid Foreclosure?

Nobody wants to be placed in the situation where they will be compelled to leave home. If you find yourself struggling, there are a couple of options that are available to you:

Prior to Foreclosure: If there is remaining equity in the property, selling the property may be an option to avoid legal troubles and financial complications.

Communicate With Your Lender: Banks don’t want to foreclose. Most banks will offer loan modifications or refinancing to enable homeowners to remain in their homes.

Downsize: If payments are becoming unmanageable, then downsizing to a less expensive home can be a smart move.

Consider Alternative Housing: The tiny home movement has gained popularity, and homeowners are downsizing to an unprecedented extent to save.

Conclusion

While zombie foreclosures are not dominating the housing market, the recent surge is a red flag. High interest rates on mortgages, inflation, and the local economy are all contributing to the possibility that homeowners will be unable to remain afloat. The silver lining: there are some options that are still available to struggling homeowners. With some early action—such as selling, negotiations with the lender, or downsizing—homeowners can avoid the costly and time-consuming consequences of foreclosure. The trick is to act early and explore every option that’s open to them before it’s too late.

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