A foreclosed home might be your best investment right now, according to Michael Murphy, editor of the New World Investor stock newsletter. In a column for MarketWatch this week, he explains why. But some housing markets are better than others for finding foreclosure gems.
RealtyTrac recently selected the five best places in the country to find a foreclosure bargain, based on its data and statistics from the National Association of Realtors and the Bureau of Labor Statistics. The selected locations offer an average sales price discount of at least 35% on foreclosure purchases, positive year-over-year growth in median home prices and relatively low unemployment rates. RealtyTrac is an online marketplace for foreclosure properties.
Here are RealtyTrac's top five metropolitan areas for foreclosure bargains, and some reasons why they made the list:
Memphis, Tenn. Thirty-seven percent of homes sold during the first quarter were foreclosure properties, sold at an average discount of nearly 53%. The average price of a foreclosure home in Memphis: $72,904. Home prices increased 18.5% there between the first quarter of 2009 and 2010.
Milwaukee-Waukesha-West Allis, Wis. Twenty-two percent of properties sold during the first quarter were foreclosures, sold at an average discount of nearly 48%. The average price of a foreclosure home there was $89,839, and home prices in general increased 6.8% there over the year.
Buffalo-Niagara Falls, N.Y.: Of the 800 properties that sold there in the first quarter, 8% were foreclosures, selling at a discount of more than 47%. Foreclosures sold for an average $57,191 in the metropolitan area. Median home prices rose 7.5% over the year.
Cleveland-Elyria-Mentor, Ohio: Twenty-six percent of homes sold in the first quarter were foreclosures, sold at an average discount of more than 45%. The average foreclosure sold for $71,438. But home-price appreciation has been strong in Cleveland, with prices up 53.8% in the first quarter of 2010, compared with the first quarter of 2009.
San Francisco-Oakland-Fremont, Calif.: Forty-five percent of home sales in the first quarter were foreclosure properties, selling at a discount of 41%; the average foreclosure sold for $327,262. Overall, home prices in the area rose 28.9% from the first quarter of 2009 to the first quarter of 2010.
Is buying a foreclosure home your best bet right now? According to RealtyTrac, prices in some areas have gone low enough for flippers to purchase, rehab and resell properties in the short term. But don't get too excited. Always do the math before making a purchase and tread carefully especially in unpredictable times like these.
