Back in 2008 and 2009, foreclosed homes were selling for double-digit discounts, but nowadays savings are much slimmer, especially in some California cities, according to an analysis by real estate site Zillow.

In Sacramento, buying a bank-owned property saves you less than 1 percent, and in Riverside it’s only 1.8 percent. That’s compared to a current national average of 7.7 percent, and 27.4 percent in the city with the highest discount — Pittsburgh, Pa. In San Francisco, the average discount is 4.7 percent. San Francisco’s foreclosure discount peaked at 20.4 percent in January 2008.

Here’s a look at some currently bank-owned homes in San Francisco:

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When the housing market was falling like a rock, the large discounts available for foreclosed properties led to the popularity of foreclosure bus tours, which real estate agents are still conducting in the Bay Area and elsewhere. But it hardly seems worth putting in the effort to learn about the foreclosure process for a tiny discount.

In two cities, Las Vegas and Phoenix, Zillow found that buying a foreclosure offered no price advantage at all.

“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.”

Carrie Kirby is a freelance writer who recently returned to the Bay Area after living for six years in Chicago. Carrie is more heavily invested in real estate than she ever expected to be, since she and her husband are now long-distance landlords of their Chicago home, and have also purchased a house in Alameda. She posts about interesting properties and real estate trends in San Francisco and Silicon Valley every Tuesday. Carrie also shares money-saving tips on her blog, Frugalistic Mom.

Article source: http://blog.sfgate.com/ontheblock/2012/11/13/foreclosure-discounts-shrinking-away/