If you’re tempted by the idea of scooping up a foreclosed property on the cheap, make sure you do plenty of research beforehand.
Especially given the current negative sentiment that home prices will fall again before they rise, and may stagnate for years before actually seeing meaningful appreciation.
So if you’re bent on buying some distressed property, make sure it’s in the right area, because when it comes to a housing recovery, you need to think local.
Top Five Metros to Buy a Foreclosed Home
The five metropolitan areas listed below were chosen by RealtyTrac because they offer an average sales price discount of at least 35 percent on foreclosure purchases, positive year-over-year growth in median home prices, and relatively low unemployment rates compared to state and national averages.
1. Memphis, TN
Roughly 37 percent of the 3,000-odd properties sold in Memphis during the first quarter of 2010 were foreclosed properties, selling at an average discount of 53 percent.
Year-over-year home price appreciation was 18.5 percent, while unemployment was slightly above the national average at 10.6 percent.
2. Milwaukee-Waukesha-West Allis, WI
In total, 2,200 properties sold here during the first quarter, with 22 percent foreclosed homes that went for an average discount of 48 percent.
Year-over-year home price appreciation was 6.8 percent, while unemployment was slightly below the national average at 9.8 percent.
3. Buffalo-Niagara Falls, NY
Just eight percent of the area’s 800 property sales were previously foreclosed on, but sold at a discount of more than 47 percent.
Unemployment was well below the national average at 8.6 percent, while home prices were 7.5 percent higher than a year earlier.
4. Cleveland-Elyria-Mentor, OH
Of the near-1,000 properties sold here during the first quarter, 26 percent were foreclosures selling at an average discount of more than 45 percent.
Unemployment was nearly on par with the national average of 9.8 percent, while home prices surged 53.8 percent from a year earlier.
5. San Francisco-Oakland-Fremont, CA
Of all first quarter sales in the Bay area, 45 percent were foreclosure properties, selling at an average discount of 41 percent.
Unemployment was higher than the national average at about 11 percent, but home prices rose 28.9 percent from a year ago.