A whopping 75% of residential areas in U.S have witnessed a steady rise in foreclosures this year. While the number of foreclosures for sale is on the rise, apartment rentals have gone down as more and more first time home buyers are seeking out good bargain deals on foreclosed homes as a more viable residential option.

Top ranking U.S States with bargain deals on foreclosures

The beginning of this year has seen a steady incline of foreclosures in some of the best residential areas in the country. While this situation has been highly dismal for home owners who are facing repossession by lending authorities, first time home buyers on the other hand are finding some highly lucrative deals in prime location. Listed below are the some of the top ranking U.S states which have currently recorded the best bargain deals on foreclosures.

• Nevada – The state of Nevada has been experiencing the highest number of foreclosures since last year with a considerable increase in the first half of 2010. One of the metro cities with the best residential areas that are offering great bargain deals is Las Vegas and the neighborhood communities of Reno-Sparks which includes some of the most economically priced housing options for home buyers.
• Florida – Florida is coming up as the second most viable real estate hot spots at the current time with the highest number of sales being recorded in the Cape Coral area. The neighborhood of Fort Myers as well as Orlando has been reported by various real estate magazines as one of the best residential areas offering some of the most lucrative deals on foreclosures. Other great locations in the state for value real estate deals through foreclosures include Miami and waterfront housing in the Pompano Beach region.
• California – Home to some of the most favored residential communities in the U.S, the state of California has had a large number of foreclosures which has drastically decreased the real estate value of most neighborhoods including the high end localities of Modesto, Merced, Riverside, Fairfield and Stockton amongst many others.
• Arizona – The state of Arizona is also coming up as a close contender with some of the best deals to offer at highly reduced prices including some of the prime neighborhood communities of the Phoenix-Mesa-Scottsdale region as well as Tucson and Prescott.

One of the best features of opting for foreclosures in the above metro areas is that home prices have reduced to nearly half of their original values making the properties located in great neighborhoods affordable for even the most modest budget buyers.

The Foreclosures Market is so fluid that foreclosures rose by 19% last month and 257,944 homes passed into the hands of banks in quarter one of 2010 setting new records. Around 4 million foreclosures will have to find their way into the market before the housing market stabilizes.

California, Nevada and Arizona account for the bulk of foreclosures. California accounts for 21% of all foreclosed houses. This means that around 840,000 Californians will be out on the street. Southern California accounts for half these numbers.

Are the 4,000,000 home owners going to be locked out of the housing market? The Mortgage giant Fannie Mae assures that this is not the case. Fannie Mae is helping home owners who wish to do short sales or deeds in lieu of foreclosure so that they can avoid foreclosures and get back the chance to home ownership more quickly. The period has been reduced by two years. Last week it was at least four year before Fannie Mae would underwrite a borrower with a report of foreclosure on their credit score.

The government through Fannie Mae is trying to shift Americans out of homes they can’t afford to homes they can afford. The situation looks rosy. Wait for two years and walk out of your property and all your debt by handing over your keys. It has happened before, only ten years ago. At that time, there were tight deadlines during the crash in the real estate market. Mortgage brokers handled lots of problem loans. In 1996, many loans were in process but few closed. Property values plunged and both borrower’s credit and their employment stability were suspect. Approval of loans became tough as foreclosures mounted from 1994 to 1999.

But a strange thing happened between late 1990’s and early 2000’s.It seemed that everyone had marked up credit. Loan approvals became easy as all lending institutions competed for borrowers. Now bankruptcies and foreclosures were fine as long as they had not crossed 2 years. Then came the period 2002 to 2007 when there was a real estate bubble where loans were easy and if you were in foreclosure since one year, it was ok with some under writers.

This experience bodes the following for the present situation of 4 million foreclosures:

• They will be gone in 3-4 years
• It will be easier to get bank loans but difficult to get cheap properties
• Buy now and hold- for- later investors will get wealthier.

Thus the real estate market for foreclosures is really fluid.

According to the latest statistics being put out by foreclosure sales reports, foreclosures accounted for 35% of all the sales in the real estate market in the first quarter of this year. Moreover, the average sale price of foreclosed homes is estimated to be 30% below than the average sale price of other residential homes in the market.

As foreclosures are being put up in the market at highly discounted prices, a large number of first time home buyers and young investors are favoring the purchase of these properties like never before. The market is also witnessing a surge of young families and single professionals who are opting for residential homes available for sale under foreclosures as a substitute to rented apartments. One of the prime reasons for this distinct trend in housing is that the current real estate market is offering a large number of homes in the $200,000 -$300,000 bracket which are half of their original prices.

Financial experts are suggesting that the steadily high rate of homes being repossessed by banks is also adding to the low real estate rates prevailing in the market. In order to dispose of foreclosures from their inventory, banks are making special efforts in marketing foreclosed homes by offering low interest loans as well as various cash incentives on closing costs and down payments. This has made REO properties as one of the most viable investment options in today’s market.

First time buyers are also selecting properties which are in the pre-foreclosure stage through short sales which is proving highly convenient for the buyers as well as the sellers. By selling off a foreclosed home through a short sale, lending agencies like banks do not have to go through the time as well as money consuming process of foreclosures. Moreover buyers can also negotiate with the lenders for a lower asking price as well as reduced closing costs especially if the property is a fixer upper home and requires considerable renovation.

Across the country, foreclosures constitute a major part of real estate sales with Nevada foreclosures accounting for 70% of their total sales, the highest in any U.S state so far. California has come up a close second with foreclosures constituting 63% of its real estate sales in the residential sector. Some of the other states where foreclosures accounted for more than 35% of their real estate sales include Arizona, Illinois, Idaho and Colorado.