Top 20 Markets for Foreclosure Deals in 2013

February 1, 2013
By RealtyTrac Staff Text Size A A A

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Although U.S. foreclosure activity is past its peak, many local markets are still weighed down with a backlog of unsold foreclosure inventory — representing an opportunity for buyers and investors to land good deals in 2013. The top 20 markets are those with a combination of ample foreclosure supply, deep foreclosure discounts and recent increases in foreclosure activity.

RealtyTrac selected the top 20 metro areas for foreclosure deals in 2013 by looking at four factors affecting availability of foreclosure inventory in 2013 as well as the discounts on foreclosure properties. Starting with all U.S. metropolitan statistical areas with a population of 500,000 or more (102 in all), we narrowed it down to the top 20 by looking at the best performers based on the following metrics:

Months’ supply of foreclosure inventory
Percentage of foreclosure sales
Average discount on foreclosure properties
Annual percent change in foreclosure activity in 2012

Based on those four criteria, we expect the following metros are most likely to have more foreclosure inventory available for sale in 2013 — and that much of that inventory will be sold at a discount compared to homes not in foreclosure.

Top 20 Metros for Foreclosure Deals:Foreclosure Inventory & Activity

Top 20 Markets for Foreclosure Deals in 2013 Sorted by Total Score

Top 20 Metros for Foreclosure Deals:Foreclosure Prices & Discounts

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Comments

Jay: thanks for your insightful comments and questions. The 97-month supply does not mean the banks have held onto the properties that long, it means that based on the current rate of foreclosure sales, it would take 97 months to sell off the total inventory. That high supply is a result of both a big backlog of inventory as well as anemic sales of foreclosures -- the latter the result of banks being skittish in states like New York of selling foreclosed properties that might be found at a later time to be improperly foreclosed on. On your second point, although somewhat counter-intuitive, we have found that the "discount" remains fairly consistent in the range of 25 to 50 percent even if the percentage of foreclosure sales is low. In fact, back in 2005, when foreclosure sales accounted for about 1 percent of all residential sales nationwide, the discount was close to 50 percent nationwide. The reason for that is that properties that fall into foreclosure in a booming market are likely properties that are in foreclosure for a reason: in very poor condition or in a very bad location. Keep in mind the discount is calculated by comparing the average price of a foreclosure property to the average price of a property not in foreclosure. Posted: February 7, 2013 by: darenb

Interesting study. Since when do banks in New York, New Jersey and Pennsylvania hold on to foreclosed properties for 8 years. Your chart says there is a 97 month supply of foreclosed properties. The next column says the foreclosures represent 7.70 % of all real estate sales, yet the the discount column says 40% discount. Can foreclosure sales as a percent of total sales be lower than 10% and discount as high as 40%. ? When number of homes on foreclosure sales are low the prices generally are high. Is there some kind of insider trading going on with banks selling properties at such huge discounts to a selected few? Alternatively the granularity of data obtained for this analysis may be flawed and needs to be looked at. Posted: February 6, 2013 by: jay