As the number of pre-foreclosure and bank-owned sales rose, home prices have dropped, creating the opportunity for investors in rental homes to get great deals. Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com, “I would say that this market is more ideal for buying foreclosures as rentals than the market back in the mid-2000s, where you saw a lot of people buying and then flipping,” “The rental market is strong, and investors can ‘pencil out’ and cash flow those properties in a lot of markets across the country.”

The number of pre-foreclosure and bank-owned sales in the Riverside-San Bernardino market peaked in first-quarter 2009 as average sales prices dropped, hitting their low in second-quarter 2009 and remaining around the $175,000 mark ever since.

A similar trend can be found in the Cape Coral-Fort Myers market, where average home prices have leveled off at around the $100,000 mark for the past few years. The foreclosure rate in this metro area ranked 17th highest in the country during the first half of 2012, according to RealtyTrac, although it had decreased 29% from the first half of 2011.

In the Denver metro area, average home prices dipped as sales rose in 2008, then rose as sales dipped in 2009, dancing around the $185,000 mark and currently on the rise. This follows the trend reported by the July Zillow Real Estate Market Reports that US home values have climbed for the eight consecutive month as more than 60% of metros have shown increasing values.

As GlobeSt.com previously reported, US foreclosure activity decreased 3% in July from the previous month, down 10% from July 2011, yet the number of properties beginning the foreclosure process on an annual basis has risen for the third straight month, according to RealtyTrac, an online marketplace for foreclosure properties. Also, a surge in short sales was indicated countrywide this year, since pre-foreclosure sales activity has risen significantly from a year ago, according to a report by RealtyTrac outlining expected short-sale trends in 2012. The report showed a 33% year-over-year increase in pre-foreclosure sales (typically short sales) in January 2012, with annual increases in 32 states including Georgia, Michigan, California, Texas, Arizona and Florida. For RealtyTrac’s complete Foreclosure News Report, click here. For more information on distressed asset investments, click here.