6 Real Estate Bargains

The housing downturn's upside? You don't have to go overseas anymore for your dream retirement home. We found the six best markets for deals.

Miami

Excess inventory means condo deals abound.

$599,000 This 1,750-square-foot midcentury modern in Biscayne Park, with Spanish porcelain flooring and a saltwater pool, is selling for $125,000 less than it would have three years ago.

Miami was the life of the party during the housing boom, and now it's got a major hangover - or make that overhang, the real estate term for how much inventory is sitting on the market and how long it's going to take to move, given current sales levels. Miami has three years' worth of overhang, say some experts - in other words, it's a buyer's market taken to the extreme.

Indeed, prices here are down 21.7% in a year, according to the S&P/Case Shiller home price index, while median condo prices fell 10% in December. Sales have nearly ground to a halt: Condo and single-family-home sales plunged 40% last year. There's even a thriving subculture of lawyers who help panicked buyers break their preconstruction contracts. For attractive deals, look in the tony enclaves slightly to the north, like Aventura, Bal Harbour, and Sunny Isles Beach. Slightly farther inland but still close to the Miami center, Coral Gables is offering some good deals too.

But keep in mind that across the MacArthur Causeway, trendier Miami Beach still holds its cachet, especially for foreign buyers, whose exchange-rate-favored bank accounts can buy more and more by the day. As such, says market guru Guy Trusty of Lodging & Hospitality Realty, prime Miami Beach condos can fetch $1,000 per square foot, while in other parts of the city you can find new condos for $200 to $250 per square foot.

Las Vegas

Big gains led to a bigger shakeout in Sin City.

$1 million This 3,450-square-foot, four-bedroom home in a development on the outskirts of Vegas overlooks a golf course and was originally listed at $1.275 million.

Whether it's the $6 billion plus spent at its gaming tables every year or the 22 million gallons of water churning through the Bellagio fountains, nothing is small-scale in Vegas - and real estate is no different. The boom years saw annual price increases of up to 50%, making Vegas one of the most overheated markets in the country; now the declines are just as extreme.

According to the S&P/Case-Shiller home price index, Las Vegas is the hardest-hit locale nationally, dropping 22.8% in a year. It's a virtual graveyard for flip-oriented investors, with one in 44 homes going into foreclosure in the first quarter of this year, the third-highest rate in the country. But those choking declines haven't altered the fundamentals of what retirees tend to seek: a sun-drenched climate, proximity to pleasure, and a rich mine of luxury-oriented homes and condos. (A nifty bonus: no state income tax.)

While it's become almost fashionable to go on foreclosure tours and take fliers on bank-owned properties, these deals aren't always as good as you'd think. Instead, take the more boring route and buy a newly built home with a warranty in outlying areas like Summerlin and Providence. Another niche to watch: high-rise condos, which take an average of three years to get on the market because of the usual thicket of zoning, permit, and construction issues. That means projects that kicked off in the boom years are coming online right about now. Fittingly, local condos are seeing price declines of 10.3% over last year. In real estate as in gambling, timing is everything.

Phoenix

Sun, golf - and prices in some communities dropping 20% to 30%.

$1.2 million This three-bedroom in a subdivision ten minutes from downtown has city and mountain views - and its price has come down by $100,000.

When it comes to attracting retirees, Arizona ranks second in the nation, having overtaken California in 2000. And real estate values have reflected its popularity: As recently as 2006, condo prices rose 15% over the previous year.

But retiree inflows haven't managed to insulate the local real estate market from the shakeout. In fact, Phoenix seems to be accelerating into the downturn, with much of its dropoff taking place in the past few months. Economy.com shows its real estate values falling almost 8% over the past year, and its foreclosure rate has nearly tripled since 2007, according to research firm RealtyTrac.

For the real deals, though, stay away from the city center, where values have held up better, according to Jay Butler, director of realty studies at Arizona State University. Instead, look to the planned communities that surround Phoenix, which are magnets for retirees and are dropping more to the tune of 20% to 30%. A $1 million home at the market's apex might go for the mid-700,000s now, Butler estimates. Look to areas like Sun City Anthem, Palm Valley, and Avondale for solid housing stock at reasonable prices. Some adult-oriented communities have sweetened the pot: Sun City Anthem has a 48,000-square-foot recreation center with pool and spa, as well as the ASU Lifelong Learning Academy, an adult-education offshoot of the university. Are the links, not the books, more your thing? Phoenix's Maricopa County has 158 golf courses, the most of any county in the country.

San Diego

Deals abound on the California coast, but prices are picking up again.

$799,000 This three-story townhome in a subdivision five minutes from downtown is already discounted from $869,000 - and would have fetched $900,000 at the height of the boom.

It's been a rough road for San Diego. Prices have dropped 9.8% in a year, according to Economy.com. It also ranks No. 9 in foreclosures in the nation, thanks to the particularly high percentage of adjustable-rate loans that were typical in many of California's most overheated markets during the boom years. But sales activity has been picking up lately, and freshly discounted homes are now getting multiple offers above their asking price.

Urban-minded retirees tend to look to San Diego's downtown, now revitalized and much more desirable than just a decade ago. Other retiree-flavored areas: Rancho Bernardo, with its array of golf courses, and Oceanside, which has seen some significant price adjustments. In fact, it's the high end where you might find the best bargains, because much of the renewed activity has been for entry-level homes, while luxury properties have been slower to move.

Be forewarned, though, that things on a daily basis here are not cheap. San Diego County's cost of living is 47% above the national average, according to the Council for Community and Economic Research. But its seaside location forms something of a floor for housing prices. And with a climate that's "75 and sunny in the dead of winter," quips Lori Staehling, president of the local realtors' association, the San Diegans, who humbly refer to their hometown as "America's Finest City," would argue you get what you pay for.

Tampa

Florida's Gulf Coast metropolis has less glamour - and lower prices.

$499,000 Agents say this newly built traditional four-bedroom home in the up-and-coming Robles area would have gone for $600,000 in 2005. One negative: It's right next to the Interstate.

It's not the Atlantic coast of Florida, with symbols of opulence like lavish Palm Beach estates or multimillion-dollar spec homes. But Tampa, with its more blue-collar feel, offers the same brand of South Florida living at a far more affordable price. How much more affordable? Prices are consistently lower by 50%, estimates Deborah Farmer, president of the Greater Tampa Association of Realtors.

To be sure, Tampa lived large during the boom years; prices rose 100% from 2001 to 2006. That was fueled in large part by speculators just looking to flip, and when they started vanishing in 2006, thanks to the slowing market and a tightening of credit, so did those massive annual increases. Real estate values have fallen 17.5% in a year, according to the Case-Shiller index.

But more than other markets, Tampa could be nicely positioned for a rebound. Its relatively strong local economy, coupled with the fact that the bust hit here earlier than in some other markets, means that the downside may have largely played itself out. The median price is now $222,000, down from $275,000 last year, and top NAR economist Lawrence Yun has singled Tampa out as well prepped for price recovery, estimating 20% or more appreciation in the next five years.

A prime spot for high-end bargain hunters: Gulf-front luxury condos in nearby Clearwater or St. Petersburg, which might have gone for a minimum of $1 million a few years ago, can now be snapped up in the $600,000 range.

Denver

Think hikes and horses instead of golf--and a market that managed to avoid the mania.

$769,850 This 4,200-square-foot three-bedroom in Denver's Park Hill was built to be energy-efficient - and has been discounted twice, first from $845,000 and then from $799,000.

Contrary to what some planned communities' brochure imagery would have you believe, not all retirees yearn for the sun-soaked desert of Phoenix or Las Vegas or a golf community in Florida. There's a sturdy minority who prefer the active, mountain-oriented lifestyle of skiing, hiking, and horseback riding, and for those types Denver is a sort of contrarian retirement destination.

It's contrarian in another way too: During one of the largest real estate run-ups in U.S. history, from 2001 to 2005, the Mile High City pretty much stood still. The reason? Its job base, heavy on high tech and information services, was rocked by the collapse of the tech bubble in 2000 and never really recovered. "The rest of the country was booming with 20% annual appreciation, and we were barely getting by with 4%,"says Mike Rinner, executive vice president of housing research firm Genesis Group.

If there's a silver lining to Denver's strange story, it's that recent softness, plus the lack of any real boom over the long term, means that median prices have remained quite attractive compared with those in other destinations. What's more, while retiree markets like Florida, Arizona, and California have turned ice-cold, Denver plods along its sagging but more stable price path. Values sank by a modest 5.5% in the past year.

Don't expect huge discounting on downtown condos, because there was never an overbuilding glut here. Instead, look to nearby adult-focused communities like Heritage Eagle Bend, Heritage Todd Creek, and Anthem Ranch. But "don't tell too many people," says Rinner. "We can only handle so much growth."