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5 Best Cities for Short Sales

Fourth-best metro area for short sales: Grand Rapids, Mich.
Percent increase in short sales: 81%

Late President Gerald Ford's hometown saw a big jump in short sales during the fourth quarter, and Blomquist suspects that's because 37% of Michigan mortgage borrowers are "underwater."

Underwater consumers owe more on their mortgages than their homes are worth, so they can sell properties only though short sales or by ponying up cash to cover their deficits.

In Grand Rapids, a 1-million-person metro area in the state's southwest region, short sales sold for $91,145 on average in the fourth quarter. That's a $53,158 discount from their owners' remaining mortgage debts.

Third-best metro area for short sales: Fresno, Calif.
Percent increase in short sales: 97%

Located in the heart of California's agricultural Central Valley, Fresno has seen falling home prices and lots of foreclosures in recent years.

But Blomquist says that makes the 1.1-million-person metro area a great location for short-sale buyers.

:"There's pretty much nowhere for the market to go but up," he says. "You're pretty safe in expecting the value of any home that you buy to appreciate over time, and prices are so low that it's much easier to make money on a rental."

The typical Fresno short sale sold for just $145,313 during the fourth quarter -- $89,140 below the average seller's mortgage balance.

Second-best metro for short sales: Visalia, Calif.
Percent increase in short sales: 106%

Like nearby Fresno, Visalia has seen declining prices and plenty of foreclosures during the bust.

But again, Blomquist says that makes the 452,000-population metro area a good choice for bargain hunters.

"The Central Valley markets have been bouncing back and there's actually a shortage of homes for sale -- but if you can land a short sale there, it's probably going to appreciate over the next few years," he says.

Visalia's average short sale cost $126,496 during the latest quarter -- $71,102 below the property's unpaid mortgage principal.

Best metro area for short sales: Santa Barbara, Calif.
Percent increase in short sales: 107%

Median house prices in upscale Santa Barbara County peaked at $878,000 in 2007 during the housing boom, then tumbled to just $297,000 a mere 20 months later.

Blomquist says that's left the metro area, a desirable coastal community some 95 miles northwest of Los Angeles, with lots of distressed properties.

"Homeowners can get in over their heads even in very high-end markets," he says.

The typical Santa Barbara-area short sale sold during the fourth quarter for only $283,825. That's $178,201 below the property's remaining mortgage balance./p>

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