The Best Places to Buy Foreclosed Homes

March 28, 2008— -- Only today's bravest buyers would consider homes in cities like Las Vegas and Tampa, where rampant foreclosures are sinking already weak real estate markets.

But in markets in other cities, where there are hints of stabilization, foreclosed properties might be a good investment.

You'll find such spots in the Sunbelt, home to Charlotte, N.C., Raleigh, N.C., Oklahoma City, San Antonio, and Albuquerque, N.M. These five cities topped our list of Best Places To Buy Foreclosed Homes.

Click here to learn more about the best places to find foreclosed homes at our partner site, Forbes.com.

To compile our list, we started with the country's 100 largest metro areas and ranked them by annual foreclosure rate, based on data from RealtyTrac, a listing firm that tracks foreclosures. To give a sense of scale, hard-hit markets have foreclosure rates in the 3% or 4% range. Riverside, Calif., has a foreclosure rate of 3.8%, and Detroit has a foreclosure rate of 4.9%. By contrast, Seattle, has a foreclosure rate of 0.4%, and Austin, Texas, has a rate of 0.8%, two figures which are within a healthy range for foreclosures, as all markets, at all times, have them.

Our goal was to differentiate inexpensive foreclosure markets from those that are undervalued, as cheap foreclosures in flimsy markets don't necessarily make strong investments. One can score a deal on a house in Detroit, for example, but there are long odds on recouping costs due to the area's current economic environment and that housing market's depression. If Detroit were adding jobs, or were a more hospitable location for business, it could be a good comeback play. But as it stands, it's not a housing market where you want any amount of your money.

Only cities on Forbes' best places list, which measures criteria such as quality of life and the local economy (labor and energy costs, the regulatory environment, taxes) to find markets, such as Raleigh, N.C., or Oklahoma City, where foreclosures aren't symptomatic of local economic ruin, were measured.