If you're bargain shopping for a home, don't be discouraged by the gigantic leaps home prices have been taking lately. There are still places where you can find cheap homes. You might start with the 10 best cities to buy short sales.
Short sales and foreclosures made up 43 percent of residential sales last year, according to RealtyTrac. And why is that? Because of the huge savings for buyers. A short sale or foreclosure offers a 30 percent to 40 percent discount off a non-distressed property, RealtyTrac said. And they're gaining in popularity: Short-sale purchases bumped up 4 percent from a year prior; foreclosure sales notched up 6 percent.
Market Watch took a look at some cities with cheap homes, led primarily by their abundant short sale and foreclosure offerings:
Santa Barbara, Calif.
Average short-sale price: $283,825.
Average discount vs. non-distressed sales: 42.69 percent.
Short-sale purchases in Santa Barbara rose 107 percent in the fourth quarter of 2012 compared to a year prior. That was the largest increase in the U.S. It's not hard to see why: The median price of all properties in the city was about $600,000. That lured a lot of homebuyers back into the market.
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Average short-sale price: $149,094.
Average discount vs. non-distressed sales: 37.84 percent.
Though investors make up a large chunk of the short sale and foreclosure buying activity, Phoenix has the added benefit of everyday homebuyers getting in on the action, too. Short sale and foreclosure purchases rose 43 percent in the fourth quarter of 2012 compared to a year prior. But time is of the essence for buyers: Inventory of these properties is falling rapidly.
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Average short-sale price: $124,555
Average discount vs. non-distressed sales: 33.4 percent
It's what's coming in the Las Vegas market that makes it ripe for real estate deals. About 8,000 homeowners in Vegas are in default on their mortgages, according to RealtyTrac, and their properties could flood the market as short sales or foreclosures very soon. "Short sales aren't going anywhere for another two to three years," Paul Rowe of Henderson, Nev.-based Shelter Realty told Market Watch.
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Average REO sales price: $57,782
Average discount vs. non-distressed sales: 56 percent
Bank-owned homes are dirt cheap in Cleveland, and that has enticed many buyers. REOs were selling for less than $60,000 on average in Cleveland in the fourth quarter of 2012. That's a 56 percent discount on the average price of a non-distressed property there.
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Average REO sales price: $111,260
Average discount vs. non-distressed sales: 43 percent
Bank-owned home sales in Charlotte increased 109 percent in the fourth quarter of 2012 from a year prior, according to RealtyTrac. The hike is apparently coming from new residents who are moving to Charlotte from more expensive markets like New York and Boston. These out-of-towners are using the money from the sale of their old homes to buy bank-owned properties in Charlotte in cash, Market Watch said.
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