Realty Check

Foreclosure Deals: 2013's Best and Worst

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After improving in 2011, foreclosure activity ramped up again in 2012, and the expectation is that it will continue to rise as banks finally clear out bloated backlogs of distressed loans. More than half of the top 200 U.S. housing markets saw foreclosure numbers rise, according to a new report from RealtyTrac, but not where you might expect; investors should take note.

(Read More: Is the Refi 'Apocalypse' Really Upon Us?)

Olick: 2013's Best and Worst Foreclosure Deals

Phoenix, San Francisco, Los Angeles, Detroit and San Diego all saw a drop in foreclosure activity. But the numbers went the opposite direction in Tampa, Miami, Baltimore, Chicago and New York.

"Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble," said Daren Blomquist, vice president at RealtyTrac. "Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year — and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets."

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RealtyTrac ranked the top markets for investors to set their sights in 2013, based on months' supply of foreclosure inventory, percentage of foreclosure sales, the foreclosure discount and the percentage increase in foreclosure activity in 2012. Five of the top ten are in Florida, including Palm Bay, Tampa, Jacksonville and Orlando. Florida requires a judge in the foreclosure process and therefore has an extremely large backlog.

(Read More: Feds' 'Fixer-Upper' Loan Helps Tidy Up Foreclosures)

New York, another judicial state, fills 4 of the top ten spots, with Rochester, Albany and the New York City area leading. Chicago rounds out the roster.

The worst markets to look for foreclosures are largely out West, where the foreclosure crisis hit first and where investors have already bought so many properties that they are now fighting for what is left. Low supplies have led to bidding wars in cities like Phoenix, Las Vegas, San Jose, CA and even Portland, OR.

(Read More: Best US Housing Markets for Buyers and Sellers)

It is truly a tale of east versus west, just as it was at the start of the foreclosure crisis with the west faring far worse than the rest of the nation. Now it is just the opposite, as demand for distressed properties continues to increase and supply determines the best bargain destinations.

(Read More: Facing Foreclosure? Don't Just Sit There—Act Now)

—By CNBC's Diana Olick; Follow her on Twitter or on Facebook at

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