Florida Is Swamped with Foreclosures – And Deals on Distressed Homes

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A worker tends to the yard around a foreclosed home in Miami, Fla.

Ah, Florida. It’s celebrated as the land of sunshine, snow birds, theme parks, and beaches. This year, it’s also considered the hottest state for snatching up foreclosed homes on the cheap.

For deals on distressed homes, look south. According to a new study from the foreclosure-tracking firm RealtyTrac, Florida was home to 8 of the country’s top 20 metropolitan areas for highest foreclosure rates last year. By no small coincidence, 5 of the top 10 “Best Places to Buy Foreclosures in 2013” also just so happen to be in Florida.

To come up with its “Best Places”—one of the few “Best Places” lists cities would prefer to not be associated with—RealtyTrac uses data points including the number of months of inventory of foreclosure homes, the percentage of total sales that are foreclosures, and the average foreclosure discount percentage. Tally up the numbers and the hottest market for scooping up distressed properties at major discounts is the Palm Bay-Melbourne-Titusville area of Florida. RealtyTrac summed up the market’s top-ranking data this way:

Topping the list of best places to buy foreclosures in 2013 was the Palm Bay-Melbourne-Titusville metro area in Florida with a total score of 394: 34 months’ supply of inventory, foreclosure sales representing 24 percent of all sales, average foreclosure discount of 28 percent, and a 308 percent increase in foreclosure activity in 2012 compared to 2011.

(MORE: Want to Buy a Foreclosure? Here’s What You Need to Know)

By contrast, overall foreclosure activity nationally appears to have peaked in 2010, and has decreased since then in the majority of U.S. markets. Las Vegas, for instance, was named one of the worst cities for buying foreclosed homes in 2013 mainly because the market has been so hot in previous years; while a whopping 42% of home sales in Vegas are foreclosures, foreclosure filings fell 57% in 2012, and there is “only” a seven-month inventory of foreclosures currently.

With the Orlando-Kissimmee, Lakeland, Jacksonville, Tampa-St. Petersburg, and Melbourne areas of Florida, meanwhile, all have at least 28 months’ worth of foreclosed properties for sale, foreclosures account for at least 24% of all sales, and foreclosure activity increased at least 50% last year. These numbers are “good” enough to get them all in the top 10 “Best Places” for foreclosure purchases this year.

So, does this mean that the average Joe in the market for a vacation home in Florida has his pick of cheap deals? Not necessarily. As real estate prices have crept up in recent years, house flippers have returned to the market, eager to scoop up foreclosures and give them a quick, inexpensive face lift before reselling at an easy profit. Small-time investors also face tough competition from huge corporate buyers who have been scooping up foreclosures on a grand scale (think: tens of thousands of homes bought in a few months’ time) so that they can be rented and, later, resold when prices rise even higher.

(MORE: House Flipping Is Hot Again)

What’s more, some Florida real estate agents say the local markets are more complicated—and competitive—than the RealtyTrac data would lead you to believe. One agent in Miami, ranked #12 in RealtyTrac’s “Best Places,” spoke with the Miami Herald about the local foreclosure situation:

Anthony Askowitz, a broker with RE/MAX Advance Realty II in Miami, said the reality of the foreclosure market is more nuanced than such statistics suggest.

“The inventory of foreclosures on the market is very low. It’s highly competitive right now for a foreclosure or a property put out as a quote ‘good deal,'” Askowitz said. “Multiple offers is the norm.”