No. 1 best market: Palm Bay/Melbourne/Titusville, Fla.
This metro area along the Atlantic coast is home to the Kennedy Space Center -- which is fitting, because its market soared toward the moon during the housing boom, then fell back to Earth in the bust.
"You have still the leftover wreckage from the housing bubble -- bad loans, a slow foreclosure process and lots of people who are 'underwater,'" Blomquist says.
The Kennedy center has also cut thousands of jobs in the past year or so following the space-shuttle program's termination, adding to the 540,000-population area's problems.
"A soft underlying job market only aggravates [the Palm Bay region's] foreclosure problems," Blomquist says.
RealtyTrac says local foreclosure activity rose a whopping 308.7% last year, with foreclosures accounting for 23.8% of all property sales in the first 10 months. The site also estimates the region has a 34-month supply of distressed properties.
Of course, that means foreclosure buyers enjoyed a 28% average discount during 2012's first 10 months -- bargains RealtyTrac expects to see repeated in 2013.