By far, these five states have the highest number of distressed properties and cheap houses for sale.



According to Reynolds, the results contradicted the public's perception that foreclosures and cheap houses for sale could be found all over the United States.

Reynolds compared the available state foreclosure rates, existing homes sales, changes in home market prices, unemployment rate and percentage of mortgages.

In January 2009, 76 houses were foreclosed in Nevada and 173 in California. In contrast, 1 out of every 2,271 homeowners filed for foreclosure in New York.

The overall foreclosure rate for January declined by 10 percent, representing 1 per 466 homes, with the mean average of foreclosed homes and cheap houses for sale dominated by the five states.

Meanwhile, other states account for only one-tenth of one percent of foreclosure or 1 for every 949 houses. In Vermont, foreclosed, cheap houses for sale were reportedly just 1 per 51,906 homes.

Reynolds? comparative analysis showed that cheap houses for sale are focused in Arizona, California, Florida and Nevada, excluding Michigan. His analysis was confirmed by another study which noted that the four states mentioned above accounted for 87 percent of losses in home value.

However, Reynolds noted that the four states have the highest number of existing home sales. This made him conclude that free market is evident in these four states because people are purchasing houses that have declined in prices the most which led to a reduced inventory of cheap houses for sale in the said states.

His analysis goes to show that the decline in home market prices is not a curse but rather a cure to the ailing housing sector.

On the other hand, mortgage brokers have been advising owners of distressed properties to discontinue paying their mortgage loans if they could not refinance their loans because the value of their homes have dropped way below the value of their mortgages.

Mortgage brokers told distressed homeowners that if they stop paying their loans, they would be able to quality for President Barack Obama's foreclosure prevention plan.

If all struggling borrowers will decide to follow the advice of mortgage brokers, it will not be long before the number of homeowners in default would skyrocket beyond control.