Foreclosure activity has reached a significant milestone as properties enter the Real Estate Owned (REO) stage, indicating financial distress for homeowners. At this stage, the lender has acquired ownership after unsuccessful auction processes. According to data from ATTOM Data Solutions, December 2025 saw a dramatic rise in REO counts, with a month-over-month increase of over 53% and nearly double the figures from the previous year. This trend signals that the ongoing foreclosure activity throughout 2025 is resulting in more bank-owned properties.
In December, 5,953 REO properties were reported across the country, suggesting that the foreclosure cycle is shifting into a new phase as it approaches 2026. REO growth varies by state, with Florida notable for a 37.3% month-over-month rise and a staggering 202.8% increase year-over-year. Other states, including California, Ohio, and North Carolina, are also experiencing substantial increases in REO inventory, reflecting a mix of local market dynamics.
The significance of rising REO numbers lies in their implications for real estate investors. Once a property becomes REO, lenders typically aim to liquidate these assets quickly, creating negotiation opportunities. Furthermore, the investor access to inspections and financing makes these properties appealing compared to other foreclosure stages. As REOs often indicate increased market stress, their rising counts could serve as a barometer for the broader housing market’s health.
Why this story matters:
- The surge in REOs indicates significant financial distress in the housing market, which could impact broader economic stability.
Key takeaway:
- December 2025 marked a pivotal increase in REO properties, signaling emerging opportunities for real estate investors.
Opposing viewpoint:
- Some may argue that increased REO inventory reflects broader systemic issues in the housing market that could lead to longer-term declines.
