In This Article When foreclosure activity reaches the REO stage, it represents the result of monetary distress. The homeowner is no longer in the image, the auction procedure has actually concluded, and the lending institution now owns the residential or commercial property outright. Genuine estate investors, this phase typically marks the most visible– and actionable– point in the foreclosure cycle.
According to ATTOM Data Solutions, December 2025 delivered one of the most remarkable shifts in bank-owned inventory all year. National REO counts rose more than 53% month over month and nearly doubled year over year, validating that the elevated foreclosure activity seen throughout 2025 is now fully emerging into lender-owned supply.
This acceleration matters. REOs don’t increase in isolation– they are the result of months of earlier distress working its way through the system. And as more homes arrive on bank balance sheets, investors might start to see increased stock, greater prices versatility, and expanded opportunity in particular markets.
December’s information recommends the foreclosure cycle is entering a new stage as we move into 2026.
National REO Stock Surges Dramatically
According to ATTOM Data Solutions, 5,953 REO properties were taped across the country in December 2025, representing:
- +53.27% month over month
- +92.72% year over year
This is among the biggest regular monthly increases in REO inventory over the last few years. The year-over-year growth– almost doubling from December 2024– validates that foreclosure completions are speeding up, not slowing.
While Foreclosure Starts and Discovers of Sale offer early and mid-cycle signals, REOs show real results. These are properties that did not solve through loan modification, reinstatement, or auction sale. Rather, they now sit directly in lender portfolios– typically waiting for personality.
State-Level REO Trends: Where Stock Is Building Fastest
Florida
Florida recorded among the most considerable REO surges in the nation. Even as early-stage filings changed in prior months, December confirms that a growing number of cases are now reaching completion.
- 427 REOs
- +37.30% MAMA
- +202.84% YoY
California
California reversed earlier softness with a sharp monthly boost. While the state’s foreclosure procedure tends to move more slowly, December suggests stalled cases are lastly solving.
- 449 REOs
- +42.99% MAMA
- +35.65% YoY
Ohio
Ohio’s REO stock continues to trend greater, reflecting a stable conversion from auction activity earlier in the year.
- 179 REOs
- +37.69% MOMMY
- +62.73% YoY
North Carolina
You might also like
North Carolina remains one of the fastest-moving foreclosure states. REO volume more than doubled year over year, underscoring how rapidly distress advances through the pipeline.
- 152 REOs
- +24.59% MOTHER
- +102.67% YoY
Texas
While Texas REOs held flat month over month, the year-over-year increase remains striking. The state continues to transform distress into finished foreclosures faster than the majority of judicial markets.
- 546 REOs
- 0.00% MoM
- +135.34% YoY
Why the REO Stage Is So Essential for Investors
REOs vary meaningfully from earlier foreclosure phases and typically attract a broader set of investors.
1. Banks end up being inspired sellers
Once a home becomes REO, it is no longer a loan– it’s a property that carries maintenance costs, tax exposure, and reputational threat. Lots of lending institutions focus on liquidation, developing opportunities for negotiation.
2. Due diligence is more available
Unlike auction purchases, REOs generally enable investors to:
- Conduct inspections.
- Review the title before closing.
- Get appraisals.
- Usage funding, consisting of non-recourse loans.
This makes REOs particularly attractive for investors looking for a more conventional acquisition process.
3. REOs reflect genuine market stress
Rising REO counts suggest:
- Fewer effective loan exercises.
- Auctions stopping working to clear stock.
- Lenders collecting homes.
When REOs rise, it frequently signifies that more comprehensive housing pressure is becoming harder to absorb.
4. Pension financiers get versatility
For investors utilizing a Self-Directed individual retirement account or Solo 401(k), REOs offer:
- More time for due diligence.
- Clearer transaction structures.
- Opportunities for long-term buy-and-hold strategies.
Compared to auctions, REOs align more conveniently with retirement account rules and timelines.
County-Level REO Insights: Where Conversions Sped up
Looking underneath state overalls, county-level data exposes where foreclosure pipelines are transforming most quickly.
Florida: Broad-based REO growth
Florida’s REO surge was geographically diverse:
- Lee County published one of the strongest month-over-month boosts, reflecting ongoing Gulf Coast stress.
- Orange County (Orlando) likewise saw meaningful development, connected to earlier investor-heavy filings.
- Miami-Dade and Broward Counties remained elevated, contributing to statewide overalls.
Investor takeaway
Florida’s REO growth is not isolated to one city– stock is broadening throughout several regions.
California: Inland markets drive the rebound
California’s December increase was led by:
- Riverside County, where postponed cases finally reached completion.
- San Bernardino County, continuing its function as a foreclosure pressure point.
- Los Angeles County, which posted moderate however constant growth.
Financier takeaway
The Inland Empire remains the most trusted source of REO inventory in California.
Ohio: Central Ohio leads
Ohio’s REO growth was concentrated in:
- Franklin County (Columbus), which revealed among the greatest mama boosts.
- Cuyahoga County (Cleveland), contributing consistent volume.
- Montgomery County (Dayton), contributing to statewide momentum.
Investor takeaway
Central Ohio continues to use exposure into future REO supply.
North Carolina: Rapid conversion continues
North Carolina’s YoY rise was driven by:
- Mecklenburg County (Charlotte)
- Wake County (Raleigh)
Investor takeaway
Despite a slower rate earlier in the fall, December validated that many cases have actually now reached conclusion.
Texas: High velocity, high volume
Texas’ REO inventory stays elevated:
- Harris County (Houston) led the state.
- Dallas and Tarrant counties contributed considerably.
- Bexar County (San Antonio) continued its upward pattern.
Financier takeaway
Texas stays one of the most effective foreclosure pipelines in the country– distress converts quickly.
How Financiers Might Utilize REO Data Strategically
REO data may assist investors:
- Determine markets where bank-owned stock is broadening.
- Anticipate rates flexibility from motivated sellers.
- Plan long-lasting rental or restoration strategies.
- Align acquisitions with tax-advantaged retirement accounts.
Tracking REOs along with Foreclosure Starts and Sees of Sale provides a full-cycle view of market stress– and opportunity.
Disclaimer
Equity Trust Business is a directed custodian and does not provide tax, legal, or financial investment recommendations. Any info interacted by Equity Trust is for educational purposes only, and should not be interpreted as tax, legal, or financial investment recommendations. Whenever making an investment decision, please speak with your tax attorney or monetary professional.
BiggerPockets/PassivePockets is not connected in any method with Equity Trust Business or any of Equity’s household of business. Viewpoints or ideas expressed by BiggerPockets/PassivePockets are not always those of Equity Trust Company, nor do they reflect their views or recommendation. The details supplied by Equity Trust Company is for academic functions only. Equity Trust Company and their affiliates, agents, and officers do not offer legal or tax guidance. Investing involves threat, consisting of possible loss of principal. Please consult your tax and legal consultants before making investment choices. Equity Trust and Bigger Pockets/Passive Pockets may get recommendation fees for any services carried out as a result of being referred chances.