When a property reaches the REO stage—Real Estate Owned—it signals the final step of the foreclosure cycle. The homeowner is out, the auction has been completed (often unsuccessfully), and the lender now holds title.
For investors, the REO category can represent a unique opportunity: properties priced below market value, homes needing renovation, and inventory that banks often prefer to liquidate efficiently.
November’s REO data reveals a continued rise in completed foreclosures compared to last year, even as early-stage filings pulled back. That combination—fewer new filings, more completed cases—is a hallmark of a maturing foreclosure pipeline. It means the early distress we saw in spring and summer 2025 is now materializing into real, actionable inventory.
This month, the numbers also revealed fascinating regional and county-level differences. Some states saw REOs surge sharply, others cooled, and several counties experienced dramatic shifts in how quickly properties moved from auction to bank-owned status.
If you’re an investor looking to understand where real distressed inventory is emerging—and how to position your strategy—November’s REO story is essential reading.
National REO Activity Climbs Again
In November 2025, the U.S. recorded 3,884 REOs (bank-owned properties), down just 0.15% month over month, and up 25.74% year over year.
This slight monthly dip is negligible—REO activity remains substantially higher than one year ago. Nationwide, more properties are completing the foreclosure process and returning to lenders’ inventories.
Remember: REOs lag Starts and Notice of Sale by several months. So this year-over-year jump reflects the elevated Starts we tracked throughout 2025, especially in fast-moving states like Texas and judicial states like Florida and Ohio.
State-Level Breakdown: A Tale of Diverging Markets
Let’s take a look at the five core states driving national REO activity.
1. Florida
- 311 REOs
- +27.98% MoM
- +132.09% YoY
Florida saw one of the most dramatic increases nationally. Even with a steep decline in new filings this month, the state’s backlog of distressed properties continues to clear.
2. California
- 314 REOs
- –6.55% MoM
- -21.89% YoY
California bucked the national trend, posting both monthly and annual declines. This suggests that, while distress exists, cases here are dragging longer through the legal process.
3. Ohio
- 130 REOs
- +7.44% MoM
- -11.56% YoY
Ohio’s REO activity is steady but slightly lower than last year. This reflects a more normalized cycle after elevated filings earlier in the year.
4. North Carolina
- 122 REOs
- -20.26% MoM
- +40.23% YoY
North Carolina continues to be one of the nation’s fastest-moving foreclosure states. Even with a monthly dip, REOs remain far higher than in 2024.
5. Texas
- 546 REOs
- +52.51% MoM
- +135.34% YoY
Texas delivered the biggest REO spike of any major state—both month over month and year over year. The state’s fast nonjudicial process continues to push properties from Start to auction to REO faster than any judicial state.
Why the REO Stage Matters for Investors
For investors, REOs offer a powerful mix of opportunities and advantages.
1. Banks become motivated sellers
When lenders take possession, maintaining the property becomes an expense, not an asset. They often want these properties sold efficiently and may price them below comparable retail listings.
2. Due diligence is easier than at auction
Unlike at a courthouse sale:
- Investors can inspect the property.
- They can order an appraisal.
- Title issues can be addressed before closing.
- Financing—including non-recourse loans inside a self-directed IRA—is possible.
This makes REOs an accessible entry point for new and experienced investors alike.
3. REOs reveal the end-point of market distress
As REO levels rise, it signals that:
- More homeowners have exited their homes.
- More auctions went unsold.
- Lenders are about to release inventory to the public market.
This can create opportunity in both acquisition pricing and volume.
4. IRA and Solo 401(k) investors benefit from timing
Because REOs move slower than auctions, investors using tax-advantaged retirement accounts can:
- Perform deeper due diligence.
- Arrange non-recourse financing.
- Structure long-term buy-and-hold strategies.
Compared to the fast pace of trustee sales, REOs fit comfortably within retirement account rules and timelines.
County-Level REO Insights: Where Distress Is Converting Fastest
Using Option C (only the most meaningful changes), here are the county-level standouts for November:
Florida: Gulf Coast and Central Florida lead REO growth
- Lee County saw one of the largest MoM REO increases in the state.
- Orange County (Orlando) also posted a meaningful rise, indicating steady conversion from earlier filings.
- Miami-Dade and Broward stayed elevated, but moved more modestly this month.
Investor insight
Florida’s REO growth is real—and geographically diverse. Expect new inventory across both coasts heading into 2026.
California: Inland Empire slows, LA stabilizes
REO declines this month were driven by:
- San Bernardino: One of the sharpest MoM pullbacks
- Riverside: Slowing REO conversion despite persistent distress
- Los Angeles: Stabilized, showing neither a surge nor collapse
Investor insight
California’s REOs are cooling, suggesting longer foreclosure timelines and fewer quick-turn opportunities.
Ohio: Columbus and Cincinnati shift
- Franklin County (Columbus) posted a surprise increase—one of the few counties to rise this month.
- Cuyahoga County (Cleveland) dropped, reflecting fewer auctions converting to REO.
- Hamilton County (Cincinnati) remained steady.
Investor insight
Columbus continues to emerge as Ohio’s most dynamic foreclosure market.
North Carolina: Volatility across major metros
- Mecklenburg County (Charlotte) saw a meaningful MoM REO decline.
- Wake County (Raleigh) followed the same pattern.
- Cumberland County (Fayetteville) experienced the steepest drop.
Investor insight
North Carolina is still growing YoY, but November marks a clear slowdown in REO conversion.
Texas: The biggest REO story in America
Texas delivered one of the most dramatic county-level stories of the month:
- Harris County (Houston) saw REO volume surge sharply MoM.
- Dallas and Tarrant Counties (DFW) also reported substantial increases.
- Bexar County (San Antonio) posted a strong jump, consistent with its rising auction activity.
Investor insight
Texas continues to convert distress into REO at record speed—ideal for investors seeking bank-owned opportunities.
How Investors Can Use REO Data to Advance Their Strategy
1. Identify markets where inventory is increasing
Rising REOs often lead to:
- More distressed listings.
- Increased negotiation leverage.
- Expanded buying opportunities.
2. Target counties where conversion is fastest
Counties with rapid Start > NOS > REO progression are ideal for:
3. Track lender behavior
Banks with growing REO portfolios may:
- Price listings more aggressively.
- Offer incentives.
- Prioritize faster closings.
4. Use REOs to build a tax-advantaged portfolio
Inside a Self-Directed IRA or Solo 401(k), REO investing may offer:
- Potential tax-deferred or tax-free rental income.
- Long-term appreciation.
- Structured loan strategies using non-recourse financing.
Take Control of Your Investment Strategy
REOs represent the end of the foreclosure cycle—but for investors, they can represent the beginning of opportunity. With clear inventory trends emerging across key states and counties, now is the time to study local patterns, evaluate property conditions, and be ready for new listings as they hit the market.
To learn how to invest in real estate using a Self-Directed IRA or Solo 401(k), visit: www.TrustETC.com/RealEstate
Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.
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