Where to find a good price on foreclosed homes
(MoneyWatch) During the worst of the housing crisis in 2011, when real estate prices were at their lowest, you could get amazing deals on foreclosed homes. Homebuyers across the country could find foreclosure properties that last sold for $250,000 going for $25,000.
Two years later such bargains are rare, largely because investors who have snapped up as many distressed properties as they
can get their hands on. Even if many homeowners remain behind on payments, the foreclosure crisis that raged after the housing crash is starting to die down.
“We’re over the hump and moving toward getting rid of all the foreclosures, but they’re still there,” said Julie Zisfein, a researcher with real estate marketplace Auction.com.
Foreclosure rates have fallen nationwide to
4.8 percent of all homeowners, although that remains much higher than normal.
“For example, in Miami, the foreclosure rate used to be 19 percent, but now it’s 15.6 percent -- that’s still the highest foreclosure rate in the country,” Zisfein said. “If you look at that in a vacuum, it’s heading in the right direction, but it’s definitely still an issue.”
Foreclosures in states such as Florida, Ohio and Nevada still offer big savings for homebuyers. But foreclosure discounts are also available ins some markets that weren’t hit hard by the crisis. Foreclosed properties are going for 41 percent less than non-distressed homes nationally, according to real estate information site RealtyTrac.
Despite a 28 percent drop in foreclosures over last year, tens of thousands of foreclosures hit the auction block every month. In so-called "judicial" states, where the lender has to go through the courts to foreclose, those numbers are actually climbing--foreclosures are up 7 percent over last year, according to RealtyTrac.
“The backlog of delayed judicial foreclosures
continues to make its way through the pipeline, with many of these
properties now being scheduled for the public auction after starting the
foreclosure process last year or earlier this year,” said Daren
Blomquist, vice president at RealtyTrac, in an email.
The median price of a foreclosure varies, but nearly every city in the country offers some kind of discount on foreclosures. Check out these 10 cities to see what kind of foreclosure deals can be had across the country.
New York City area
Median foreclosure price: $232,819
Median non-distressed sales price: $401,500
Discount: 42 percent
The median price for a foreclosure hasn’t changed much since the deepest trenches of the housing crisis. Two years ago, the median price of a foreclosure was $214,000, and prices in September of this year (the most recent data available) show an increase of only 8.4 percent. Thanks to increasingly expensive home prices in New York, foreclosures still offer a big discount over non-distressed properties.
Chicago area
Median foreclosure price: $107,511
Median non-distressed sales price: $226,500
Discount: 53 percent
Non-distressed median home prices in the Windy City are up 22 percent since 2011, but foreclosures haven’t seen quite the same increase. Averaging about $89,000 in 2011, foreclosure prices have grown a little more than 9 percent. Chicago's housing market has recovered more slowly compared with other hard-hit markets, but it’s headed in the right direction.
Minneapolis/St. Paul area
Median foreclosure price: $137,657
Median non-distressed sales price: $208,500
Discount: 34 percent
The Twin Cities are touted as an affordable, cultured metropolitan area that is especially appealing to those just gradating from college and other young professionals. Minneapolis didn’t suffer as much during the housing crisis as other cities, so foreclosure discounts aren’t as great. The median price of foreclosures also hasn’t changed much, dropping in 2011 to $110,000 before returning to prices similar to 2010.
Las Vegas area
Median foreclosure price: $140,000
Median non-distressed sales price: $161,500
Discount: 13 percent
Surprisingly, foreclosures don’t offer much savings over non-distressed properties in Las Vegas, one of the U.S. cities that was at the epicenter of the housing crash. But that’s only because foreclosures are so abundant that non-distressed property values come close to matching them. Overall home prices and foreclosure prices in the area have increased about the same amount since 2011, just above 40 percent.
Miami area
Median foreclosure price: $111,000
Median non-distressed sales price: $180,000
Discount: 38 percent
Miami has the highest foreclosure
rate in the country, so it follows that foreclosed properties here are abundant and
cheap. Still, foreclosure prices have climbed 25 percent since bottoming out in 2011.
Cincinnati area
Median foreclosure price: $53,417
Median non-distressed sales price: $136,000
Discount: 61 percent
Housing conditions in Cincinnati are similar to the those elsewhere in Ohio, where home prices are deflated in part
because of the high number of foreclosures. Cleveland offers a 67 percent
discount, Columbus and Dayton offer a 57 percent discount, and Akron’s
foreclosures are discounted 55 percent. In a sign of the state's slow recovery, the price of a foreclosure in
Cincinnati has barely moved since the throes of the crisis.
Atlanta area
Median foreclosure price: $91,314
Median non-distressed sales price: $168,000
Discount: 40 percent
While Atlanta has its fair share of multi-million dollar foreclosures, it also offers plenty of affordable ones. Home prices have certainly increased in the area, but foreclosure prices have risen only 7 percent. With a 40 percent discount, there are good deals to be had in the city, which is why so many investors have been snapping them up.
Oklahoma City area
Median foreclosure price: $70,501
Median non-distressed sales price: $135,000
Discount: 48 percent
Oklahoma City is a quiet Midwestern city, and its housing market is pretty quiet, too. While non-distressed home prices have grown nearly 4 percent, foreclosure prices have actually shrunk about 6 percent. Lenders in Oklahoma must get court permission to complete a foreclosure, so the process takes longer than in non-judicial states. That accounts for why foreclosure prices in Oklahoma have dropped as more foreclosures have hit the market.
Phoenix area
Median foreclosure price: $148,000
Median non-distressed sales price: $180,000
Discount: 18 percent
Home prices in
Phoenix have recovered since 2011, when the housing market was at its worst.
The city has moved through a huge chunk of foreclosures, which has helped
housing prices grow. Foreclosure prices have seen a large jump, from $95,900 in
September 2011 to $148,000 this year.
San Francisco Bay area
Median foreclosure price: $351,500
Median non-distressed sales price: $605,000
Discount: 42 percent
Home prices in San Francisco have skyrocketed since the housing crash, making it one of the most expensive cities to live in the U.S. Even foreclosed properties have gotten pricey -- median foreclosure prices have grown 42 percent since 2011, when the median price was $246,000. Foreclosures are also scarcer here than in other cities on this list.