Foreclosure activity last year decreased from 2010 - when foreclosures peaked in most markets - in 181 out of the 212 markets tracked in the report, according to RealtyTrac, an online marketplace for foreclosure properties.

Foreclosure activity last year dropped from 2011 in 12 of the nation's 20 largest metro areas, led by Phoenix (down 37%), San Francisco (down 30%), Detroit (down 26%), Los Angeles (down 24%) and San Diego (down 24%). But activity increased in eight of the 20 largest metros, led by Tampa (up 80%), Miami (up 36%), Baltimore (up 34%), Chicago (up 30%) and New York (up 28%).

Despite double-digit percentage decreases in foreclosure activity compared to 2011, California cities accounted for the top four metro foreclosure rates, led by Stockton with 3.98% of housing units (one in 25) with a foreclosure filing during the year - nearly three times the national average.

Other California cities with foreclosure rates among the 20 highest were Riverside-San Bernardino-Ontario at No. 2 (3.86% of housing units with a foreclosure filing), Modesto at No. 3 (3.82%), Vallejo-Fairfield at No. 4 (3.73%), Merced at No. 11 (3.23%), Bakersfield at No. 15 (3.11%) and Sacramento at No. 20 (2.94%). All seven California cities in the top 20 documented declining foreclosure activity compared to 2011.

Florida cities accounted for eight of the 20 highest metro foreclosure rates, led by Miami at No. 5 with 3.71% of housing units with a foreclosure filing during the year. Other Florida cities in the top 20 were Palm Bay-Melbourne-Titusville at No. 6 (3.60%), Orlando at No. 8 (3.46%), Tampa at No. 12 (3.22%), Lakeland at No. 13 (3.17%), Jacksonville at No. 14 (3.14%), Cape Coral-Fort Myers at No. 18 (3.08%), and Ocala at No. 19 (3.01%). Except for Cape Coral-Fort Myers, all Florida cities in the top 20 documented increasing foreclosure activity from 2011 to 2012.

Other cities with foreclosure rates among the nation's 20 highest were Atlanta at No. 7 (3.51% of housing units with a foreclosure filing), Chicago at No. 9 (3.31%), Rockford, Ill., at No. 10 (3.28%), Las Vegas at No. 16 (3.10%) and Phoenix at No. 17 (3.09%).

Daren Blomquist, vice president at RealtyTrac, said markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble.

"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," he said.

To choose the best places to buy foreclosures in 2013, RealtyTrac scored all metro areas with a population of 500,000 or more by summing up four numbers: months' supply of foreclosure inventory, percentage of foreclosure sales, foreclosure discount and percentage increase in foreclosure activity in 2012.

Topping the list of best places to buy foreclosures this year was the Palm Bay-Melbourne-Titusville metro area in Florida with a total score of 394: 34 months' supply of inventory, foreclosure sales representing 24% of all sales, average foreclosure discount of 28%, and a 308% increase in foreclosure activity in 2012 compared to 2011.

Five other Florida cities ranked among the Top 20 best places to buy foreclosures: Lakeland, Tampa, Jacksonville, Orlando and Miami. Five New York cities ranked among the 20 best places to buy foreclosures in 2013, based largely on big backlogs of foreclosure inventory and big increases in foreclosure activity in 2012: Rochester, Albany, New York, Poughkeepsie, and Syracuse.

Other cities in the Top 20 were Chicago; El Paso, Texas; Philadelphia; Allentown, Pa.; Youngstown, Ohio; Bridgeport, Conn.; Cleveland; New Haven, Conn. and Indianapolis.

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