The price difference between a foreclosure and non-distressed sale is getting smaller, according to new analysis from ""Zillow"":http://www.zillow.com/.[IMAGE]
In September, the nationwide discount for bank-owned properties compared to non-foreclosures was 7.7 percent, Zillow reported. In September 2011, the foreclosure discount averaged 9.1 percent and in August 2009, foreclosure discounts peaked at 23.7 percent.
The discounts can vary greatly from metro-to-metro, but discounts seen across most U.S. metros are getting smaller. Year-over-year, foreclosure discounts decreased in 76.9 percent of the metros analyzed, and all the metros showed a decrease from their peak.[COLUMN_BREAK]
Nationwide foreclosure discounts peaked in 2008 and 2009, and some areas offered discounts that exceeded 30 percent.
Major metro areas where significant foreclosure discounts can be found include Pittsburgh (27.4 percent), Cleveland (25.8 percent), Cincinnati (20.2 percent), and Baltimore (20 percent). Other metro areas with discounts much higher than the national average were New York (15.5 percent), Detroit (15.2 percent), and Boston (15.1 percent).
On the other hand, several hard-hit metros offered little to no discount. Phoenix and Las Vegas offered no discount in September, while Sacramento offered a 0.7 percent, according to Zillow.
Foreclosure discounts in Phoenix peaked at 23.3 percent in June 2009 and in Las Vegas, the discounts reached 24.1 percent in October 2004, Zillow found.
""The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,"" said Zillow chief economist Dr. Stan Humphries. ""Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.""
In California cities Riverside and San Diego, the discounts were 1.8 percent and 2.4 percent, respectively. In Riverside, foreclosure resales accounted for 26.6 percent of sales.