Inman

RealtyTrac: Top 10 real estate markets for foreclosure buying and investing

Inman

Editor’s note: In compiling the "10 Best Markets for Real Estate Investors" report, Inman News reached out to a range of data providers and online real estate sites that supplied statistics and charts to identify real estate markets that may be well-suited for investors. The following chart and accompanying methodology were provided by foreclosure data site RealtyTrac.

Source: RealtyTrac.

Methodology:

Starting with a universe of the nation’s 100 largest metropolitan statistical areas based on population, the RealtyTrac top 10 list was calculated by filtering out the top 25 metro areas in each of the 10 categories listed below and then tabulating which metro areas showed up most frequently in those top 25 lists.

If multiple metro areas showed up the same number of times in the top 25 lists, the first tiebreaker was which showed up the most in the top 10 lists for those same categories, and the second tiebreaker was which had the highest two-year change in average home sales price.

10 categories:

1. Lowest first-quarter 2011 foreclosure activity rates.

2. Biggest first-quarter 2011 annual decreases in foreclosure activity.

3. Biggest first-quarter 2011 two-year decreases in bank-owned (aka real estate-owned or REO) inventory.

4. Lowest unemployment rates in March 2011.

5. Biggest annual decreases in unemployment rates for March 2011.

6. Biggest first-quarter 2011 annual decreases in percentage of total sales that were foreclosures.

7. Lowest average foreclosure sales prices in first-quarter 2011.

8. Biggest first-quarter 2011 annual increases in average prices of foreclosure sales.

9. Biggest average discounts on foreclosure sales in first-quarter 2011.

10. Biggest first-quarter 2011 annual increases in average sales prices (for all sales). 

Glossary of Terms:

"Foreclosure (FC) sale": a sale of a property that occurs while the property is actively in some stage of foreclosure. (Stages include "NOD" for notice of default, "LIS" for lis penden, "NTS" for notice of trustee’s sale, "NFS" for notice (judgment) of foreclosure sale, and "REO" for real estate owned or bank-owned property.) This definition of foreclosure sale includes only sales to third-party buyers or investors not involved in the foreclosure process. It does not include property transfers from the owner in default to the foreclosing bank or lender.

"REO sale": a sale of a property that occurs while the property is actively bank-owned (REO).

"Preforeclosure sale": a sale of a property that occurs while the property is actively in default (NOD, LIS) or scheduled for foreclosure auction (NTS, NFS).

"Pct. of all sales": total share of foreclosure sales (or preforeclosure sales or REO sales) among all residential sales during the quarter or year.

"Avg. FC sales price": the average sales price of foreclosure sales (or preforeclosure sales or REO sales) during the quarter or year, excluding sales with no sales price.

"Avg. FC discount": the percentage difference between the average sales price of foreclosure sales and the average sales price of nonforeclosure sales during the quarter or year. In order to come up with the discount, RealtyTrac takes the sale price and divides it by the number of square feet in the home, to come up with the average price per square foot. Then it parses the numbers by property (those not in foreclosure, those in foreclosure, and those which have already been repossessed by the banks). Comparing the average cost per square foot gives RealtyTrac the discount rates. The company doesn’t take into account the condition of the property or the type of property (i.e. a condo vs. a detached home).

"Avg. REO discount": the percentage difference between the average sales price of REO sales and the average sales price of nonforeclosure sales during the quarter or year.

"Avg. preforeclosure discount": the percentage difference between the average sales price of preforeclosure sales and the average sales price of nonforeclosure sales during the quarter or year.

Source: RealtyTrac.

Read the full report: "10 Best Markets for Real Estate Investors."

View more charts provided by data companies and online real estate websites: