Even though the real estate market has largely bottomed out, there are still plenty of foreclosures happening all over the country. RealtyTrac, a firm that performs an annual analysis of U.S. foreclosures released its analysis of foreclosures in 2012 and has determined which U.S. metro areas will likely have the best foreclosure deals for 2013. The data is based on more than 1 million foreclosures in 102 metro areas (a metro is considered to be an area with 500,000 residents or more).
To calculate which areas had the best foreclosure buys for investors, RealtyTrac figured in the percentage of foreclosures compared to all homes sold. They found that the metro areas that are the best for buyers are essentially the ones with the most foreclosures. RealtyTrac's Vice President Daren Blomquist stated of said metros, "These are markets where buyers have more foreclosure inventory available and more leverage with sellers. If you don't like the deal that one seller offers you, you can simply move on to the next property."
That said, here are the top five markets for buying foreclosures in 2013:
Number 5: Lakeland, Florida: Lakeland is a metro of 590,000 located around 35 miles from Tampa. An 'ex-urban' community that keenly felt the after-effects of Tampa's boom/bust cycle, Lakeland's foreclosure filings rose by 95.7% last year. The area's distressed properties accounted for around all homes sold last year and it has a 34 month backlog of foreclosures on the market. Part of the problem is Florida's judicial foreclosure rules; the average foreclosure in Florida during 2012 took 853 days, which is more than twice as much as the national average of 414 days. During 2012, foreclosure buyers got discounts of nearly 30% and RealtyTrac predicts ongoing bargains for 2013.
Number 4: New York City: Last year saw a 40% average discount for foreclosed properties in 2012. RealtyTrac projects that this discount will remain stable and perhaps even increase in 2013. This is largely due to the whopping 97-month backlog of foreclosures for sale. Like Florida, New York has a long foreclosure process. In 2012, the average foreclosure took 1,089 days (nearly three years), which is the longest in the country. Blomquist offers an explanation for this trend, "New Yorkers have been particularly aggressive in not letting lenders foreclose unless they have all the proper documentation in place."
Number 3: Albany/Schenectady, New York: New York's state capital is, of course, subject to the same long foreclosure times as New York City and in 2012 they had an 86-month backlog of foreclosed homes on offer. The foreclosure filing rate increased by a huge margin in 2012: 107.7%. During 2012, the average property in the Albany metro saw a 35% price break.
Number 2: Rochester, New York: Rochester, a city located in the northwest of the state along Lake Ontario, saw foreclosure filings increase by 132.6% in 2012 and they have a 78-month glut of distressed homes. Buyers saw an average of 25% discounts when purchasing such properties last year.
Number 1: Palm Bay/Melbourne/Titusville, Florida: The number one spot takes us back to the Sunshine State with the Palm Bay metro. Found on the Atlantic coast and home of the Kennedy Space Center, this metro's foreclosure filings increased by an astronomical 308.7% in 2012, likely due in part to lay-offs at the Kennedy Space Center. Buyers received an average discount of 28% on foreclosed homes.
Even though we have only discussed 5 cities, honorable mention also goes to Pensacola, Florida; Greensboro, North Carolina; Canton, Ohio; Daytona Beach, Florida; Winston-Salem, North Carolina; and Columbus, Ohio.